AUD/USD Crosses Over 50 EMA – Is it Good Time to go Long?  

Posted Tuesday, August 4, 2020 by
Arslan Butt • 2 min read

The AUD/USD pair closed at 0.71230, after placing a high of 0.71495 and a low of 0.70761. Overall, the movement of the AUD/USD pair remained bearish throughout the day. The pair remained lower, ahead of the RBA monetary policy meeting and their interest rate decision on Tuesday. The improving US dollar exerted further downward pressure on the AUD/USD pair.

The US Dollar Index was up on Monday, to a high of 94.00, and the US 10-year Treasury bond yield was also up by 5% on Monday. This kept the US dollar on the upside and the AUD/USD pair under pressure. On the economic data front, the US dollar sent out mixed signals to the traders, as the Final Manufacturing PMI for July fell short of expectations, coming in at 50.9, against the estimated 51.3, weighing on the US dollar.


On the other hand, the ISM Manufacturing PMI surged to 54.2 compared to the anticipated 53.6, lending support to the US dollar. The Construction Spending in June fell to -0.7%, from the projected 1.0%, putting pressure on the US dollar. The ISM Manufacturing Prices rose to 53.2, compared to the estimated 52.2 and the previous 51.3, strengthening the US dollar. The Total Wards Vehicle Sales from the US extended to 14.5M from the anticipated 14.0M, bolstering the US dollar.


The US dollar supported the highlighted ISM Manufacturing PMI data, as it showed an expansion in the manufacturing sector in July, and the strong US dollar pulled the AUD/USD pair down further. From the Australian side, the AIG Manufacturing Index in July rose to 53.5 from 51.5 in June. At 6:00 GMT, the MI Inflation Gauge rose to 0.9%, from the previous 0.6% in July. At 6:30 GMT, the ANZ Job Advertisements for July came in at 16.7%, against the 41.4% of the previous month.


Meanwhile, the tensions between the US and China escalated, after US President Donald Trump threatened to ban the TikTok app in the United States. Meanwhile, tech giant Microsoft said, late on Sunday, that it had held talks with ByteDance, with a view to obtaining the rights to operate TikTok in the US. According to the potential deal between the two companies, Microsoft will buy the rights to TikTok in the US, Canada, Australia and New Zealand.


President Trump did not back the spinoff deal involving Microsoft, but he agreed to give the companies 45 days to negotiate a deal. There are some speculations that the motive behind banning TikTok was not a national security concern, but rather propaganda, because the data of 15-year-old dancing around can’t possibly have any national security implications. It has raised concerns that the Trump administration merely wants to hamper China’s rise as a tech competitor to the United States.


The decision to ban the TikTok app is still pending, and traders are waiting to see whether it is going to aggravate the ongoing tussle between the US and China. The China-proxy Aussie also suffered as a result of the rising tensions between the US and China.

Daily Technical Levels

Support Resistance

0.7130 0.7154

0.7116 0.7164

0.7106 0.7178

Pivot point: 0.7140

On the technical side, the AUD/USD is slightly bullish, as the pair has soared, to trade at the 0.7140 level. On the higher side, the double-top resistance level of 0.7145 is likely to extend resistance. A bullish breakout at the 0.7145 level could extend the buying trend to the 0.7186 level, while the support continues to hold at levels around 0.7120 and 0.7077. The RSI and MACD are likely to keep the AUD/USD bullish. Let’s consider buying over the 0.7140 level today. Good luck! 


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