The AUD/USD currency pair is building significant momentum and overtaking 07/06 highs. It is this last point that is causing the current surge, driving largely positive economic indicators from China. Time and time again, the Australian dollar has shown how resilient it is. It has recently found support on a bullish 20-period Simple Moving Average (SMA), which greatly outpaces the long-term 100 and 200 SMAs. What’s more, the AUD/USD looks poised to test last week’s high of 0.6534. Market participants are jumping at the bit awaiting further bullish advances.
From a technical perspective, the AUD/USD pair has encouraging signs of further continuation of its upward move. Having found intraday dip buyers close to the bullish 20 SMA, the pair then rocketed higher. Now, it aims for a breakout of critical overhead resistance levels. Analysts can now expect to see resistance intersecting options at 0.6540, 0.6575, and 0.6610, each of which may be closely watched inflection points for traders. On the other hand, 0.6490, 0.6455, and 0.6410 have become support levels.
The recent appreciation of the Australian dollar can be overwhelmingly ascribed to a greater than advertised trade surplus from China. Trade Balance increased more than expected to $103.22 billion, adding strong positive strength to the AUD/USD pair. Worries intensified after mixed economic data from China did little to dispel concerns over the Communist Party country’s slowdown. With the PPI declining 3.3% year on year for May and a CPI retreating 0.2% month on month, the net effect has been supportive of the Australian dollar.
The Relative Strength Index (RSI) for AUD/USD is presently at 61. This would suggest that the currency pair is in an overall healthy trading range and hasn’t reached overbought extremes. In conjunction with this, the Momentum indicator lingers around the 100 mark, suggesting a solid bullish trend in market sentiment.
Looking forward, traders are looking most closely at Australia’s upcoming economic releases. Coming up on Tuesday, the June Westpac Consumer Confidence index. Further, the NAB Business Conditions and Business Confidence indexes will be released on the same day. In this context, these reports will shed more light on the economic landscape and likely steer the AUD/USD pair’s momentum one way or the other.