The Australian Dollar (AUD) rallies against the US Dollar (USD) on Wednesday, increasing the price of AUDUSD to more than 0.7250 following the release of Australia’s manufacturing news. The technical bias remains bearish because of a lower low in the recent downside move.
As of this writing, the pair is being traded around 0.7265. A hurdle may be seen near 0.7307, the horizontal resistance area ahead of 0.7446, another critical resistance level and then 0.7500, the psychological number as demonstrated in the given below daily chart. A break and daily closing above the 0.7500 resistance area shall incite renewed buying interest, validating a move towards 0.7778, the swing high of the last major upside rally.
On the downside, the pair is likely to find a support around 0.7158, the swing low of the last major downside move ahead of 0.7100, the psychological number and then 0.6908, another key horizontal support area. The technical bias shall remain bearish as long as the 0.7524 resistance area is intact.
Australia AiG Manufecturing Index
A private measure of Australia’s manufacturing sector expanded for the third consecutive month in December, as factory output continued to regain momentum after succumbing to volatility in the third quarter. The Australia Industry Group (AiG) performance of manufacturing index (PMI) rose to 55.4 in December, following a 1.3 point increase the previous month. A PMI reading above 50 signals expansion, while a reading below that level points to contraction. December was the third consecutive month manufacturing activity expanded. Output contracted unexpectedly in August, ending 13 straight months of gains.
Considering the overall technical and fundamental outlook, buying the pair around current levels could be a good strategy in short to medium term.