AUD/USD keeps the foot on the pedal, trades beyond 0.7200

• AUD/USD trades above 0.7200, gain 1.15%, despite worse than expected Australia PMI readings.
• The market upbeat tone remains, as the American session advances.
• Investors’ focus is on the Jackson Hole Symposium, we could expect reduced liquidity in the week.

The AUD/USD trades back above 0.7211, edging up for a 1.15% gain, ahead of the Jackson Hole Symposium.

China’s recent news about zero domestic covid cases improved the market’s sentiment. Earlier in the day the Australian Commonwealth Bank PMI figures for services and manufacturing were released, showing declines to 43.3 and 51.7, respectively. The market reaction was muted, as the sentiment remains positive. The markets’ main focus is on the Federal Reserve Chair Jerome Powell, by the end of the week.

The price action will be ruled on the covid news and the Federal Reserve. If Australia’s current covid outbreak continues to worsen we could see some US dollar strength and flight to safe-haven assets. However, as we advance through the week, we could expect reduced liquidity conditions and tighten trading ranges.

AUD/USD technical outlook

AUD/USD trades around 0.7201. The pair trades inside a descending channel and continues to test the midpoint. The daily moving averages stand above the spot price, with the shorter-time frame under the longer-time frames. If today’s session closes above 0.7200, the price will try to test 0.7300. Adding to this, the last 3 daily candle bars will unveil a morning-star candle pattern that has bullish implications, with 0.7300 as the first resistance, followed by the 50-day moving average which stands at 0.7412, and July 13 high at 0.7502.

On the other hand, a sustained fail above 0.7200 could exert pressure on the downside. Zooming towards the 4-hour chart, the price has fulfilled its 64 pip average true range, so the pair could be near its top. If the pair fails to break 0.7200, the downward pressure will be towards 0.7120 today’s low, followed by 0.7100 and then 0.6990.

Daily chart RSI is at 37.40 exited from oversold readings, while the Average True Range is 64 pips, aiming higher.