- Summary:
- The AUDUSD pair is under intense pressure, a few days after it reached a YTD high. Bears now remain in total control and there is a possibility it will drop
The AUDUSD pair is in its third consecutive day in the red today as traders react to the weak services PMI data from Australia. The pair is also reacting to the overall stronger US dollar and the weak Australian trade numbers.
In a report released earlier today by IHS Markit, the services industry in Australia contracted in August. The PMI number dropped to 49.0 from the previous 58.2. That was the first time in three months that the PMI has been below 50.
According to the report, the contraction of the manufacturing sector was mostly because of the second wave of the virus, which led to a slowdown among service providers. As you recall, the Australian government announced travel restrictions in Melbourne and Victoria in August as the number of cases continued to rise.
The AUDUSD pair also reacted to the weak construction index from the country. According to the Australia Industry Group (AIG), the construction index declined to 37.9 in August from the previous 42.7.
Another data from the Australian Bureau of Statistics showed that the country’s exports declined by 4% in July while imports rose by 7%. These dynamics led to a sharp decline in the trade surplus from $8 billion to $4.6 billion.
AUDUSD technical analysis
The four-hour chart shows that the AUDUSD pair has been under intense pressure after it reached a high of 0.7411 on Monday. The price is slightly above the 50-day and 100-day EMA and there are signs that it will crossover today. Also, the price is above the ascending trendline that connects the lowest levels in June and August.
Therefore, the AUDUSD pair is likely to continue falling as bears attempt to test this trendline at 0.7225. Obviously, this trend will be invalidated if the price moves above this week’s high of 0.7411.
AUDUSD technical chart
