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AUD/USD bulls committing at the pivot, eye 0.7066 R1

1/2/2019, 10:18:00 AMMarket Analysis
AUD/USD bulls committing at the pivot, eye 0.7066 R1

AUD/USD has been buoyed by a slump in the greenback, despite the surprise to November's Chicago PMI that had initially sent yields in the US higher, widening the AU/USD spread and subsequently weighing on the currency pair. 

Bulls have managed to fend off the threat of a monthly bearish engulfing candle, for the meantime, that otherwise bolsters the bearish technical picture underpinned by the uncertainties on both an economic and political standpoint as we start the New Year. Meanwhile, China's official nonmanufacturing PMI, which includes the construction sector, fell to the weakest level in 17 months in October, mainly due to weakness in the service sector, which is an anchor on the pair.

Trump is sending a mid-level US delegation to China

China and International Trade in 2019: The crossroads of a great power

Risk got a boost on the close of 2018 when news wires were reporting that the US administration was sending a mid-level US delegation to China in the week of January 7th to initiate the next round of trade negotiations.

AUD/USD levels

Valeria Bednarik, Chief Analyst at FXStreet notes that the pair trades not far from its yearly low of 0.7016 and poised to break it lower:

"Short-term, and according to the 4 hours chart, the pair is neutral-to-bearish, hovering around a flat 20 SMA, currently at 0.7046, while technical indicators head nowhere around their midlines. In the same chart, the 100 and 200 SMA  maintain their bearish slopes well above the current level, indicating that any uptick will likely be temporal and a chance to sell higher. The bearish momentum is set to accelerate on a break below 0.6990."