AUDUSD Consolidates Near Previous Highs
31 March 2022
The Australian dollar slid Thursday, losing 0.25% ahead of the US session, trading near 0.7480 and defending 5-month highs reached earlier this week.
During the Asian session on Thursday, Chinese manufacturing PMI declined to 49.5 in March, down from 50.2 previously. Likewise, the services sector fell from 51.6 to 48.4. Both numbers came out below expectations, and they are now in the contraction territory (below the 50.0 threshold). However, the Australian dollar failed to react in a volatile way.
Additionally, the Australian government announced on Thursday that it would impose tariff increases on all imports from Russia. The Russian imports will be hit with 35% tariffs, effective from April 25.
The pair is now consolidating in the narrow range between 0.7540 and 0.74440. We can expect further consolidation over the following days as the bullish momentum has run out of steam.
If we see a bullish breakout, the pair could continue higher toward 0.76, posting fresh yearly highs.
Alternatively, the breakdown below 0.7440 could lead to the retest of the 200-day moving average ( the green line) at around 0.730.
The daily seems overbought and overextended, likely prompting some profit-taking and a correction to/below 0.7440.