AUD/USD bounces back to levels above 0.7200

• Aussie recovery from 0.7160 lows extends beyond 0.7200.
• Upbeat Chinese data and a weaker UD dollar are underpinning the Australian dollar rally.
• Above 0.7225, AUD/USD could extend to 0.7245 and 0.7310.

the australian dollar has been gathering momentum in the European session on Tuesday. The pair’s recovery from a two-week low of 0.7170 has reached intraday highs at 0.7225 so far.

Chinese data and a weaker US dollar have boosted the AUD

AUD/USD has managed to recover around 0.7% on the day so far to make up lost ground after falling around 2.5% in the previous two days. An upbeat set of Chinese macroeconomic figures and the downward correction of the US dollar support the rally of the Australian dollar.

Earlier today, Chinese data has beaten expectations with industrial production growing at a 7.5% yoy pace and retail consumption expanding at a 6.7% yoy pace in February.

Beyond that, the mild reversal in the US dollar, with the dollar index roughly 0.5% lower on the day due to falling US bond yields, has helped the Australian dollar rally.

AUD/USD testing resistance at 0.7225

From a technical point of view, the pair appears to be struggling to break out of the 0.7225 area, where previous intraday support meets the 100-day SMA.

Above here, the next potential targets could be 0.7245 (March 8 low) and the 200-Day SMA at 0.7310 before heading towards the 10 Mar 11 highs at 0.7365.

On the downside, a bearish reversal beyond 0.7200 would expose the mentioned two-week low at 0.7165 before seeing the 28 Feb low at 0.7140 and the 15 Feb 24 low at 0.7090/95.

Technical levels