AUD/USD preserves small gains above 0.80 as DXY stays under pressure
The AUD/USD pair is staying afloat above the critical 0.80 handle on Friday as the greenback remains under pressure amid disappointing macro data from the U.S. As of writing, the pair was trading at 0.8019, gaining 0.2% on the day.
The first data from the U.S. on Friday showed that retail sales contracted by 0.2% on a monthly basis in August and missed the market expectation of 0.1% growth. Later in the session, the Board of Governors of the Federal Reserve announced that the industrial production declined 0.9% in August, the biggest fall in nearly 8 years. The poor data dragged the US Dollar Index to its lowest day since the start of the week at 91.60.
However, further details of the industrial production report revealed that Hurricane Harvey, which hit the Gulf Coast of Texas in late August, is estimated to have weighed heavily on the total output. "The manufacturing industries with the largest estimated storm-related effects were petroleum refining, organic chemicals, and plastics materials and resin," the Fed said. With the data's negative impact on the greenback fading away quickly, the DXY is now at 91.72, down 0.35% on the day.
Despite today's rebound, the pair is looking to close the week with losses after rising for five straight weeks. With no more data that could impact the price action left in the remainder of the day, the pair is likely to continue consolidating above the 0.80 handle.
Technical outlook
The RSI indicator continues to inch higher above the 50 mark, suggesting that the bullish momentum is likely to persist. On the downside, 0.8000 (psychological level) could be seen as the first technical support ahead of 0.7945 (50-DMA) and 0.7870 (Aug. 31 low). On the flip side, resistances align at 0.8125 (Sep. 8 high), 0.8165 (May 14, 2015, high) and 0.8200 (psychological level).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
