AUDUSD Poised to Break Out Higher on Positive Chinese PMI?

AUDGBP AUD to GBP
AUDGBP

AUDUSD is leading gains among the forex majors this morning following positive PMI data from China. As of this writing, the currency pair is up by 0.20% at 0.6183.

According to China’s official PMI data, the manufacturing PMI for March was at 52.0. Meanwhile, the services PMI printed at 52.3. These numbers were positive for risk because they beat expectations at 44.9 and 42.1, respectively. More importantly, the printed above 50.0 which is considered as the baseline number which indicates industry expansion.

Consequently, they suggest that China’s economy, which is the second largest in the world, may be on its way to recovery following the coronavirus pandemic. AUDUSD traded higher following the reports because it is widely seen that Australia would benefit from strong Chinese growth given that China is the country’s largest trading partner.

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AUDUSD Outlook

On the 4-hour time frame, it can be seen that AUDUSD has been consolidating in the last few trading hours. Because this follows after a strong bullish run, a bullish flag chart pattern has been completed. This is considered as a bullish continuation pattern, and so, a close above yesterday’s high at 0.6198 could mean a rally to 0.6640 where AUDUSD peaked on March 4.

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Alternatively, the 1-hour chart shows that the currency pair has room to trade lower and still maintain its uptrend. By connecting the lows of March 19, March 26, and today’s Asian session lows, it can be seen that there is trend line support at 0.6110. If support at this price does not hold, the next floor could be at the 200 SMA at 0.5940.More content