AUD/USD: The Squeeze Carries On
Ming Lam April 29, 2020 11:17 PM
The AUD/USD continues a powerful rebound from a low marked on March 19...
The AUD/USD, currently above 0.6500, continues a powerful rebound from a low marked on March 19.
Overnight the U.S. Federal Reserve hinted at keeping near-zero interest rates and asset purchases for the foreseeable future. The central bank acknowledged that the coronavirus pandemic is posing a considerable risk to the medium-term outlook for the economy.
The U.S. dollar then weakened against its major counterparts, with the ICE U.S. Dollar Index sinking to a two-week low of 99.48 and posting a four-day decline.
Meanwhile, led by the U.S. stock market (up over 2% overnight), global stock markets are enjoying a broad-based rebound as investors' risk appetite grows.
Many traders regard the Australian dollar as a "proxy trade" of the Chinese economy in view of closing trading relationship between the two countries. China's economic data are therefore important to reading the AUD/USD pair.
This morning, China's Manufacturing PMI posted at 50.8 for April (51.0 expected) and Non-manufacturing PMI at 53.2 (52.5 expected). Not bad.
So, ingredients for producing downward pressure on AUD/USD are missing.
On a Daily Chart, AUD/USD keeps trading within a Bullish Channel drawn from March 19 (closing low 0.5744, intraday low 0.5508).
It is staying comfortably above the ascending 20-day moving average, which has just crossed above the 50-day one.
Trading above the Key Support at 0.6270 (around the 50-day moving average), the pair is expected to encounter Overhead Resistance at 0.6685 and 0.6850.
Source: GAIN Capital, TradingView
On an Intraday (30-Minute) Chart, AUD/USD remains within a Bullish Channel drawn from April 28.
Technical indicators (20-period, 50-period moving averages, relative strength index) are still so well directed to favor a bullish bias.
Key Support is located at 0.6520, while Overhead Resistance is expected at 0.6565 and 0.6590.
Source: GAIN Capital, TradingView
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