- AUD / USD consolidates the bounce above 0.7500 amid a poor Chinese PMI.
- The US dollar is rebounding across the board, licking its post-NFP wounds.
- The technical setup points to more recovery gains ahead of the US Services PMI.
After witnessing a solid turn from six-month lows of 0.7445 on Friday, the AUD / USD pair is taking a breather so far this Monday, slightly defensive amid a broad comeback in the US dollar.
The USD is recovering from losses led by the US NFP as risk aversion sentiment comes to the rescue of the US dollar bulls. Anxiety over the Fed’s upcoming policy moves after the upbeat NFP report, combined with a sharp slowdown in China’s service sector activity, has led investors to the safe haven of the US dollar.
Meanwhile, bad Chinese data is also weighing on the Australian dollar, while investors are refraining from opening large positions in the AUD / USD pair ahead of the Reserve Bank of Australia’s (RBA) monetary policy decision on Tuesday.
The RBA is likely to start talking about reducing its emergency asset purchase program, despite the lockdown in the country’s largest city due to an outbreak of the Delta variant of covid. The central bank is expected to leave the rate unchanged this week at the all-time low of 0.10%.
Meanwhile, investors await the release of the US ISM services PMI for new business incentives, while the upbeat Australian retail sales for May were largely ignored by market participants.
AUD / USD Technical perspectives
The AUD / USD pair has seen a bullish pennant pattern on the 4-hour chart, with a sustained break above the downtrend line resistance above 0.7522 to confirm the bullish continuation pattern.
Higher up, buyers will head to the psychological level of 0.7550, above which the June 29 high of 0.7571 could be tested.
The RSI is pointing higher above the center line, suggesting a further rally.
AUD / USD four-hour chart
On the other hand, if the downtrend line support at 0.7502 breaks, the 21-period SMA at 0.7495 could be tested.
Lower down, sellers could target multi-month lows of 0.7445.
AUD / USD additional levels