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AUD/USD looks set to challenge 0.7050/55 resistance, domestic data in the spotlight

  • The Aussie holds recovery ahead of domestic data as markets trim the USD gains.
  • Multiple highs marked during early-April, around 0.7050/55, could gain buyers’ attention.

The AUD/USD pair trades near 0.7015 during early Asian sessions on Friday. The Aussie pair managed to hold recent gains after ANZAC day holiday on Thursday while traders await domestic data. Also in the spotlight will be the on-going trade talks between the US and China together with the US Q1 2019 GDP.

The Australian Dollar (AUD) benefited from the market’s profit-booking moves off the greenback on yesterday.

It should also be noted that recent news from the US-China trade talks give positive signals as the US is ready to take another step back to help the much awaited trade deal take place. The US lawmakers are likely to give China concessions on drug protection.

Improvement in overall risk sentiment can also be considered as a reason for a pullback of AUD/USD as it is generally considered to be a barometer of market risk. Another gauge of market risk sentiment, 10-year treasury yields from the US, stopped their previous declines and gained nearly one basis point to 2.53%.

First quarter (Q1) 2019 readings of Australia’s import, export and producer price indices will be in the immediate focus of the Aussie traders. Import price index may dip to -1.1% from +0.5% prior while export prices could plunge -0.8% versus +4.4% earlier while looking at the quarterly statistics during Q1 2019. Moving on, the producer price index might grow +0.6% from +0.5% on QoQ basis while likely remaining unchanged to +2.0% on a yearly format.

Additionally, the US Q1 2019 gross domestic product (GDP) could soften to 2.1% from 2.2% if observing an annualized pattern.

Technical Analysis

An upward sloping trend-line rising from January 04, at 0.7010/05, presently acts as important support, a break of which is likely highlighting the risk of the quote’s drop to 0.6980 and then to 0.6910 supports.

Meanwhile, 0.7050/55 area comprising multiple lows marked during early April acts as a nearby upside target for the Aussie buyers ahead of aiming 50-day simple moving average (SMA) level of 0.7105 and 0.7130 figure comprising 100-day SMA.

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