Australian dollar bounces off the bullish foundations at US$0.6845-55

June 30, 2022 - 2 months ago

The Australian dollar hit and bounced off a two-week low towards US$0.6845-55 Thursday and is now showing a positive bias as it slowly picks up bids and look towards the US$0.6900 handle.

Earlier, China’s preliminary readings of official PMIs were better for May. The NBS manufacturing PMI rose to 50.2 versus 49.6 prior, versus 50.4 forecasts.

Meanwhile, the Non-Manufacturing PMI rallied to 54.7 versus 52.5 expected and 47.8 in previous readings.

Looking ahead is the U.S. Fed’s preferred inflation gauge, the Core Personal Consumption Expenditure (PCE) Price Index, for May, which is expected at 0.4% MoM versus 0.3% prior.

While speaking at the European Central Bank forum in Sintra, Portugal, U.S. Federal Reserve Chair Jerome Powell said there’s “no guarantee” the central bank can tame runaway inflation without hurting the job market.

Based on the technical assessment, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator may appear weak while holding in negative territory; however, a potential bull run is evident.

The Moving Average Convergence Divergence (MACD) oscillator supports a weak negative bias but rising, while the ADX indicator holds to a ranging market.

As the bulls continue to defend the key support area around US$0.6845-55, momentum is expected to increase, with the upside target viewed to US$0.7000-15, with US$0.6935 seen as minor.