AUD/USD Forex Signal: Stuck In A Range As China Woes Mount

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Bullish view

  • Buy the AUD/USD pair and set a take-profit at 0.6870.
  • Add a stop-loss at 0.6700.
  • Timeline: 1-2 days.
Bearish view
  • Set a sell-stop at 0.6800 and a take-profit at 0.6700.
  • Add a stop-loss at 0.6875.

The Australian dollar pulled back slightly on Tuesday as traders started moving back to the offices. The AUD/USD pair retreated to a low of 0.6800, a few points below last week's high of 0.6870. Traders will focus on the recent Chinese economic numbers and the upcoming US jobs data economic slowdown

The AUD/USD price pulled back after China published another set of weak economic numbers. According to the National Bureau of Statistics (NBS), the country's manufacturing output remained under pressure in December.

The manufacturing PMI dropped to 49 in November from the previous 49.4. It was the third straight month that the manufacturing output data has contracted. The figure was also worse than the median estimate of 49.5.

In a report, the NBS noted that the industry was going through an increasingly complicated, tough, and uncertain external environment. It cited weaker foreign markets as well as a difficult internal one for the slowdown.

Chinese economic numbers are important for the US and Australian dollars because it is the second-biggest economy in the world. It is the biggest consumer of Australian goods like coal and iron ore.

Looking ahead, the next important data to watch will be the upcoming US manufacturing PMI data by S&P Global. Based on the flash report published in December, economists expect the data to show that the country's manufacturing PMI retreated to 48.2 in December, signaling that the sector is contracting.

The other minor data to watch will be the latest estimate of US GDP data by the Atlanta Fed. This report is expected to show that the economy expanded by 2.3% in Q4'23 after growing by 5.2% in the previous quarter.

Looking ahead, the only major data to watch this week will be Friday's US non-farm payrolls (NFP) data/USD technical analysis

The AUD/USD price has been in a strong uptrend in the past few months, helped by the retreating US dollar. It has pulled back in the past two days in a relatively low-volume environment.

The pair remains slightly above the 50-period moving average and the Woodie pivot poin . At the same time, the MACD indicator has moved downwards but remained above the neutral point.

The outlook for the pair is modestly bullish, with the next point to watch being last month's high of 0.6870. The stop-loss of this trade is at 0.6700.

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