AUDUSD, H4
The pair fell more than 90 pips, or around 1.2%, yesterday, from the two-month high seen last week on the poor economic data in July of the major trading partner China. Chinese retail sales rose 2.7% year-on-year, compared with forecasts of 5% and 3.1% last month, while industrial production grew 3.8%, compared with the 4.6% forecast and 3.9% the month before. China’s unemployment rate dropped for the fourth straight month to a six-month low of 5.4% in July.
Another important pressure factor is the return of the US Dollar after investors returned to assess the outlook of the Fed’s monetary policy again. As speeches by several policy makers pointed out, the Fed is unlikely to change its stance from hawkish to dovish, despite signs that inflation may have peaked. There will also be more speeches from Fed officials this week, including the minutes of the FOMC meeting on Wednesday, in which the market is expecting new clues about the Fed’s interest rate policy.
However, the AUDUSD pair recovered partially on Tuesday morning, after the minutes of the RBA’s August meeting pointed out that Australian inflation in the second half will likely continue to rise to a peak of 6% at the end of the year
Technical View: In the H4 timeframe, the AUDUSD price has dropped from the high zone seen last week with a bearish divergence and is now testing the 0.7000 key support which is the same area as the MA50 line, while the MACD and RSI are moving near the neutral zone and beginning to lean towards the downtrend. If there is a bounce up there will be resistance at 0.7050 and the previous high of 0.7130. Conversely, if the price breaks down the 50 MA, the key support will be at 0.7000 and the 0.6950 zone.
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Chayut Vachirathanakit
Market Analyst
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