In the face of weak Chinese PMI, the AUD/USD consolidates its gains over 0.7500.
The US dollar is regaining strength across the board, licking its post-NFP wounds.
More rebound gains ahead of US ISM Services, according to the technical setup.
After a strong recovery from six-month lows of 0.7445 on Friday, the AUD/USD pair is taking a breather this Monday, slightly on the back foot amid a wide US dollar rally.
The greenback is recouping losses caused by the US nonfarm payrolls report, as the risk-off market atmosphere saves the USD bulls. Anxiety about the Fed’s next policy measures following the optimistic NFP report, along with a significant downturn in China’s services sector activity, drew investors to the US dollar as a safe haven.
Meanwhile, the Australian currency is being weighed down by weak Chinese data, and investors are avoiding huge bets on the Antipodeans ahead of the Reserve Bank of Australia’s (RBA) monetary policy meeting on Tuesday.
Despite a lockdown in the nation’s largest city owing to an outbreak of the Delta covid strain, the RBA is poised to begin reducing its emergency asset purchasing program. This week, the central bank is expected to keep rates at a record low of 0.10 percent.
Meanwhile, the pair awaits the release of the US ISM Services PMI for new trade opportunities, as the optimistic Australian Retail Sales data for May was mostly overlooked.
On the four-hourly chart, the aussie has formed a bull pennant, with a persistent break above the falling trendline resistance at 0.7522 needed to confirm the bullish continuation pattern.
The buyers will then aim for the psychological threshold of 0.7550, above which the June 29 high of 0.7571 may be tested.
The Relative Strength Index (RSI) is rising above the middle line, indicating more upside potential.
If the falling trendline support at 0.7502 fails, a test of the 21-Simple Moving Average (SMA) at 0.7495 may be attempted.
The multi-month lows of 0.7445 will be next on the sellers’ radar./n
