AUD/USD: Weaker around 0.7000 as USD recovers
|- Aussie ignores trade optimism as USD recovery outweighs.
- China Caixin Manufacturing PMI misses estimates, with 51.5 in Dec.
- AUD/USD sees a negative start to 2020 despite PBOC rate cut.
Broad-based US dollar recovery remains the key theme starting out 2020, weighing negatively on most majors, including the AUD/USD pair, as it battles the 0.70 handle in early European trading.
2020 kicks off with the dollar recovering amid Chinese RRR cut, trade optimism
The major fails to benefit from the US-China phase one trade deal-led risk-on sentiment while the PBOC RRR cut to revive the Chinese economic growth and firmer copper prices also did little to help the AUD bulls. US President Trump said on the final day of 2019 that the US-China phase one trade deal will be signed on January 15th in Washington.
The pair risks further correction as the US dollar recovery is set to extend ahead of the US macro releases and light trading. Further, the technical set up also points to a deeper correction below 0.7000, as explained by Omkar Godbole, FXStreet’s Analyst.
Omkar noted: “The 4-hour chart is reporting a bearish divergence of the relative strength index and the MACD histogram. A bearish divergence occurs when an indicator prints lower highs, contradicting higher highs on price and represents bullish exhaustion. The Doji candle seen on the 4-hour chart is also signaling buyer exhaustion and validating the overbought or above-70 reading on the 14-day RSI.”
Meanwhile, downbeat Chinese Caixin Manufacturing PMI data also adds to the bearish bias seen around the Aussie. China's Caixin Manufacturing PMI eased to 51.5 in Dec vs. 51.7 expected.
AUD/USD Technical levels to watch
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