AUDUSD Weighed Down by Australian PMIs BUT Technicals Suggest Potential Upside

AUDUSD is leading losses in today’s trading today as PMI reports from Australia reveal contractions in the manufacturing and services industries. As of this writing, the currency pair 0.36% or 22.5 pips below its opening price at 0.6300.

Data for April showed that the manufacturing PMI was at 45.6. There was also a downward revision from March’s earlier reading of 50.1 to 45.6. Meanwhile, the services PMI showed that the sector deteriorated this month when it came in at 19.6 after coming in at 38.5.

What do these numbers mean?

Figures below 50.0 indicate economic contraction while readings above the baseline point towards expansion. With this, it’s unsurprising to see that AUDUSD was weighed down in today’s Asian session.

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AUDUSD Outlook

On the daily time frame, it can be seen that the downtrend on AUDUSD still remains intact despite its impressive bullish run since mid-March. This is evidenced by the falling trend line which becomes apparent when you connect the highs of December 31, March 6, and April 15. If there are enough sellers in the market, we could see the currency pair fall to its April 3 lows at 0.5990.

Alternatively, it’s worth pointing out what looks like a bullish pennant. This chart pattern is characterized by a consolidation with a slightly downward slope which follows a strong rally. Watch out for a strong bullish close above the high of April 15 at 0.6442. This would constitute an upside break and invalidate resistance at the falling channel. Consequently, it could mean that there may be enough buyers in the market to push AUDUSD to its March 10 highs at 0.6655.

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