AUD/USD bulls face challenges in maintaining control as China’s trade figures and Australia’s first-quarter Gross Domestic Product (GDP) fail to meet expectations, dampening the upside momentum that reached its highest level in three weeks.
As a result, the Australian pair retreats towards the intraday low of around 0.6670, as we approach the European session on Wednesday.
China’s Trade Balance shows a deterioration, with a value of $65.81 billion compared to the expected $92.0 billion and the previous reading of $90.21 billion.
While Exports and Imports display mixed results, with the former dropping beyond the expected -0.4% and the previous reading of 8.5% to -7.5% year-on-year (YoY), the latter improves to 2.3% from the market forecast of -0.8% and the previous reading of 4.2%.
On the other hand, Australia’s Q1 GDP increased by 0.2% quarter-on-quarter (QoQ), lower than the previous reading of 0.5% and the market forecast of 0.3%. Similarly, the yearly GDP comes in at 2.3% compared to the analysts’ estimation of 2.4% YoY and the previous reading of 2.7%.
From a technical perspective, the Australian pair exhibits a bearish chart pattern known as a rising wedge on the four-hour timeframe. Recently, it has reversed from the golden Fibonacci ratio, which represents the 61.8% Fibonacci retracement of its downturn between May 10 and May 31.
The reversal from the crucial Fibonacci ratio also justifies the overbought RSI (14) line, indicating a potential opportunity for sellers.
Nevertheless, a clear downward break of the lower boundary of the mentioned wedge, approximately around 0.6650 at present, becomes necessary for the AUD/USD bears to regain control.
However, the convergence of the 200-SMA and the 50% Fibonacci retracement level at around 0.6640-35 presents a formidable challenge for sellers in the AUD/USD pair.
On the other hand, a successful break of the 61.8% Fibonacci retracement level at 0.6680 requires confirmation from the upper boundary of the mentioned wedge, which stands close to the psychological round figure of 0.6700 at the time of writing, in order to attract AUD/USD buyers.
Additionally, the mid-May swing high around 0.6710 acts as an upside barrier.
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