The AUDUSD pair did it again. It bounced from the pivotal 0.70 level for the second time in a raw. A quick look at the chart at the bottom of this article, and you understand the importance of the 0.7 level for the price action during the second part of the year.
Put it simply, while above, the AUDUSD remains bullish. Only a break below brings a bearish tone for the AUDUSD pair.
So what caused the recent bounce?
Australian Markit Composite PMI Surges in October
One explanation comes from the fact that the USD trades with an offered tone across the board. That is correct.
However, the Australian data today also beat expectations by a mile. The PMI Markit Composite came out at 53.6 on 51.1 previously. Moreover, the PMI Services shows solid growth in the sector, coming out for the month of October at 53.8 when compared to 50.8 previously.
All in all, robust growth for the services sector, something we could not say for other parts of the world (i.e., Eurozone). As such, demand for AUD generated spillovers in other currency pairs too. Coupled with the general weak tone for the USD, there is no surprise that the AUDUSD pair bounced again from the 0.7 level.
Next question – where will it stop?
AUDUSD Technical Analysis
The pair seems to have formed a double bottom right at the 0.7 level. While the price did not reach the neckline yet, it looks like it is just a matter of time until that happens.
Therefore, aggressive bulls may want to trade at the market with a stop-loss at the 0.7 level. Next, bulls would want to remain invested for the measured move given by the double bottom.
In other words, the AUDUSD pair has good chances to make a new high for the year, providing the 0.70 level holds. If that comes ahead or after the US elections, it remains to be seen.