The AUD/USD is retreating from a three-month high against the U.S. Dollar on Friday, as investors took profits following positive domestic and U.S. economic data. The Forex pair spiked to .7712 before sellers came in to stop the rally.
Positive data from China helped nudge the Aussie higher. China’s latest manufacturing PMI showed a surprise acceleration of factory activity in June, with the index rising from 51.2 to 51.7. Investors were looking for a read of 51.
In Australia, private sector credit growth held steady at 0.4 percent month-on-month in May, edging up from 4.9 percent to 5 percent year-on-year.
In the U.S., the Core PCE Price Index came in as expected, up 0.1%. Personal Spending also matched expectations, up 0.1%. Personal Income, however, increased by 0.4%, up from 0.3%.
The Chicago PMI was bullish with a read of 65.7, up from 59.4, and above the 58.1 estimate. Revised University of Michigan Consumer Sentiment also beat expectations with a read of 95.1.
Technical Analysis
The main trend is up according to the daily swing chart. However, due to the prolonged move up in terms of price and time, the AUD/USD is in the window of time for a potentially bearish closing price reversal top.
Earlier today, the AUD/USD broke out above the March 30, 2017 main top at .7679. This move took the Aussie to .7712 before sellers came in to stop the move. A break back below .7679 will be a sign of weakness. This will suggest that the breakout was fueled by buy stops rather than aggressive new buyers.
Forecast
Based on the current price at .7677, investors should pay close attention to the price action around yesterday’s close at .7681.
A close below this level will produce a closing price reversal top. This won’t indicate a change in trend, but it will indicate that the selling is greater than the buying at current price levels.