The pair AUD/USD edged higher on the back of an above-forecast China industrial production data.
Industrial production in China rose to 5.7 percent year-on-year in December, significantly exceeding the forecast of 5.3 percent. The readings above the forecast can be taken as a sign that global demand may not be as weak as previously thought. Meanwhile, retail sales rose to 8.2 percent in December, as expected.
However, AUD risks returning to session lows of around 0.7150, as China’s growth rate in the fourth quarter slowed to 6.4 percent year-on-year — the lowest since early 2009 — more so because the PBOC and the government of China are unlikely to introduce a flood-like incentive to support a sick economy.
AUD/USD Technical Analysis
The Aussie dollar failed to break the 0.7210 resistance recently and later started a downward move against the US Dollar. The AUD/USD pair declined and broke the 0.7200 and 0.7180 support levels.
There was also a close below the 0.7180 support and the 50 hourly simple moving average. Moreover, there was a break below a connecting bullish trend line with support at 0.7165 on the hourly chart, which later acted as resistance.
The pair recently corrected higher, but it struggled near the broken trend line and the 50% Fib retracement level of the last decline from the 0.7215 high to 0.7149 low.
Overall, the current price action is bearish and it seems like AUD/USD may continue to move down towards the 0.7150 or 0.7120 support levels. On the upside, the main resistances are 0.7180 and 0.7200.