FXstreet.com (Barcelona) - Having climbed throughout the US session to post a high at 1.0496, AUD/USD failed to test the psychological 1.05 level and declined before soft Chinese PMI data caused price to fall a point further.

Whilst the Chinese PMI data beat expectations, it still came in under the 50 threshold for the eleventh straight month and the bearish sentiment was supported by soft Japanese Trade data later during the session. The Chart Art team at Baby Pips have highlighted a head and shoulders formation on the 4hour chart and believe that “the formation is roughly 150 pips in height, which means that the pending breakdown could reach until the 1.0300 area.”

This morning has seen a busy European economic calendar with French and EU PMI figures disappointing analyst expectations whilst German PMI surprised to the upside. UK Retail Sales at 08:30 GMT may offer some momentum for the pair before the headline risk event of the day, the European Systematic Risk Board Meeting which is confirmed but not scheduled in the calendar for a set time.

Elsewhere European Equities remain underwater alongside the majority of commodities whilst Spanish and Italian yields remain largely unchanged this morning.