AUDUSD Is Holding on the Lower Trendline of an Ascending Wedge Pattern
Jason Lubin August 22, 2020 6:40 AM
The U.S. Dollar Currency Index rises as U.S. economic data beats estimates.
The US Dollar was bullish against most of its major pairs on Friday with the exception of the NZD and CAD. On the U.S. economic data front, Markit's U.S. Manufacturing Purchasing Mangers' Index spiked to 53.6 on month in the August preliminary reading (52.0 expected), from 50.9 in the July final reading. Markit's U.S. Services Purchasing Mangers' Index jumped to 54.8 on month in the August preliminary reading (51.0 expected), from 50.0 in the July final reading. Finally, Existing Home Sales surged to 5.86M on month in July (5.41M expected), from a revised 4.70M in June.
On Monday, no major economic data is expected to be released.
The Euro was bearish against most of its major pairs with the exception of the GBP. In Europe, U.K. Office for National Statistics has reported July retail sales at +3.6% (vs +2.0% on month expected). Research firm Markit has published preliminary readings of August Manufacturing PMI for the Eurozone at 51.7 (vs 52.9 expected), for Germany at 53.0 (vs 52.5 expected), for France at 49.0 (vs 53.7 expected) and for the U.K. at 55.3 (vs 53.8 expected). Also, preliminary readings of August Services PMI were released for the Eurozone at 50.1 (vs 54.5 expected), for Germany at 50.8 (vs 55.1 expected), for France at 51.9 (vs 56.3 expected) and for the U.K. at 60.1 (vs 57.0 expected).
The Australian dollar was bearish against most of its major pairs with the exception of the GBP and EUR.
The AUD/USD declined 32 pips on Friday. The currency pair has been advancing within an ascending wedge pattern that began to form after the pair crossed above its 200-day moving average. The RSI is just above 50 and pointing down. The pair is likely to find support on the lower trendline and bounce towards its 2020 high of 0.7275. If price can break above the 0.7275 resistance, it could potentially reach for 0.7395, a level last reached in December of 2018. If the pair falls below the lower trendline then traders should look to the 0.7065 support level for a possible rebound. If price cannot hold at 0.7065 it would be a bearish signal that sends the pair back to 0.6970.
Source: GAIN Capital, TradingView
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