AUDUSD Pulls Back After Trump-Biden Debate – What Next?
The AUDUSD pair has turned lower today as traders reflect on the relatively stronger dollar. The pair has ignored the relatively strong manufacturing PMI data from China and the strong house price index data from Australia. It is trading at 0.7115, which is lower than the day’s high of 0.7140.
The biggest catalyst for the AUDUSD is the stronger dollar. The overall dollar index has gained about 10 basis points as the market react to the first presidential debate between Donald Trump and Joe Biden. Indeed, the overall stock market has dropped after the debate, with the Dow Jones and S&P 500 futures falling by close to 1%.
The pair is ignoring data that showed that the manufacturing industry in China continued to do well. The first reading by China Logistics showed that the manufacturing PMI rose to 51.5 in September while the composite PMI rose to 55.1. Another reading from Markit disappointed slightly as it showed that the PMI fell from 53.1 to 53.0. Still, with PMIs being above the 50 level, it is a sign that the sector is in an expansion mode.
Meanwhile, data from Australia provided early indication of how the economy was affected by the return of the pandemic. In August, building approvals fell by 1.6% while housing credit rose by 0.2%. Private sector credit rose to 0.0% from the previous -0.1%.
AUDUSD technical outlook
The four-hour chart shows that the AUDUSD pair has been in a strong upward trend from September 25, when it traded at 0.7000. The pair reached a high of 0.7150 this week. It has now fallen to the 23.6% Fibonacci retracement level. It is also slightly above the 25-day exponential moving average.
Therefore, I suspect that the pair will likely continue falling as bears aim for the next support at 0.7080. But to achieve that, they will need to move below the 25-day EMA at 0.7098. On the flip side, a move above this week’s high of 0.7150 will invalidate this trend since it will send a signal that there are still buyers in the market.