AUD/USD dips below 0.7600 handle after Chinese PMI disappoint

After hitting a fresh three-week high level on Tuesday, the AUD/USD pair tipped lower on Wednesday and is now trading marginally below 0.7600 handle. 

On Tuesday, the pair witnessed a sharp reversal from RBA-led fall to 0.7487 and jumped above 0.7600 handle, to 0.7638 on speculation that the central bank would now wait to see the impact of this year’s rate-cut decision before easing further. 

The major, however, retraced a bit on Wednesday following the release of weaker Chinese services PMI print for July that came-in at 51.7 as against 52.9 expected and 52.7 recorded in June. 

With the scheduled release of ISM non-manufacturing PMI from the US, later during NA trading session, services PMI will remain on traders’ radar and provide further momentum for the AUD/USD pair. Also in focus on Wednesday would be ADP report on US private sector employment for July.

Technical levels to watch

On the immediate downside, weakness below 0.7580 seems to drag the pair immediately towards 0.7550-45 previous resistance, now turned support. A follow through selling below 0.7550 support would turn the pair vulnerable to drop back towards 100-day SMA support near 0.7500 psychological mark, which if broken would negate any near-term bullish bias and exert additional selling pressure in the near-term.

On the flip side, sustained strength above 0.7600 handle, and a subsequent momentum above 0.7630-35 resistance area, has the potential to continue boosting the pair, initially towards 0.7670-75 resistance and eventually towards its next major resistance near 0.7800 handle.