Earlier today, the Australian Bureau of Statistics reported that the country had a 10.60 billion AUD trade surplus in March. The forecast was only for a 6.40 billion AUD reading.
Meanwhile, data from Australia’s largest trading partner (prior to the pandemic), China, reported mixed data. The Caixin services PMI for April came in lower than the expected 50.1 reading at 44.4. This means that the industry was still contracting last month despite restrictions in China being more relaxed. As for its trade balance data, China posted a whopping 318 billion CNY ($45.3 billion) trade surplus. The forecast was only for a modest reading of 82 billion CNY ($9.1 billion.
On the 4-hour time frame, it can be seen that AUDUSD pulled back some of its gains to the 61.8% Fib level (when drawing the Fibonacci retracement tool from the low of March 21 to the high of April 30). This price, around 0.6400, also coincides with the 100 SMA. A closer look at the currency pair’s price action shows that this is not the first time that it found support at this level. Because this is the second time, it’s possible that AUDUSD could be on its way to forming a double bottom chart pattern. For this to happen, the currency pair needs to reach 0.6460 which would in turn be its neckline resistance. If there are enough buyers in the market, we could even see AUDUSD rally to its recent highs at 0.6570.
On the other hand, a close below the low of May 4 at 0.6372 would invalidate this bullish assumption. Instead it could mean that there are still sellers in the market. AUDUSD could then fall to its April 21 lows at 0.6252.