The AUD/USD pair is seen correcting lower in the Asian morning trades and hovers around 0.7450 levels, retreating from fresh eight month highs reached at 0.7485 on Monday. The Aussie rallied the highest levels since July 2015 following a solid rally in the iron-ore prices as well on the recoveries in oil prices.
Further, markets are also seen locking-in gains this session after a five-day rally in the Aussie, and also as investors turn cautious ahead of the Chinese trade balance data.
China’s trade surplus expected to shrink in February
The weekend’s announcement of the Chinese government’s 2016 growth target set the tone for the markets at the start of the week, with the authorities aiming China to grow its economy by 6.5 to 7% over 5 years.
Focus now remains on China’s February foreign trade data, with markets expecting the a narrowed trade surplus of $49 billion, from January’s $63.3 billion.
Analysts at BAML forecast a 15.2% y/y decline in headline exports, which fell 11.2% in January. Import growth could improve to negative 12.9% from the same period the year before, mainly because of favourable base effects.
The data is usually released just before 0300 GMT.
AUD/USD: Technical levels to watch
Valeria Bednarik, Chief Analyst at FXStreet noted, “The pair has broken above its daily ascendant channel, indicating an increasing upward momentum that should keep the pair running beyond the 0.7500 region. Short term, the 1 hour chart shows that the technical indicators are giving signs of exhaustion in overbought territory, but that the price is well above a bullish 20 SMA. In the 4 hours chart, the 20 SMA has advanced up to the 0.7380 region, maintaining a strong bullish slope, whilst the RSI indicator consolidates around 78 and the Momentum indicator continues to draw a bearish divergence, heading south within bullish territory, yet to be confirmed. Support levels: 0.7445 0.7410 0.7380. Resistance levels: 0.7490 0.7530 0.7585.”
(Market News Provided by FXstreet)