The recent publication of PMI Manufacturing indices for various countries has had a significant impact on the forex market. Particularly, the news was disappointing for the US, as the actual PMI values fell short of expectations. This led to a weakening of the US dollar, as the lackluster manufacturing activity data fueled speculations about potential interest rate cuts by the Federal Reserve. Consequently, other currencies gained strength against the dollar, with the AUD/USD exchange rate reaching its highest level in 2 weeks.
Technical Analysis Indicating Potential Weakness for the Australian Dollar
While the US dollar is showing signs of rebounding from its decline, technical analysis of the AUD/USD chart suggests potential internal weakness for the Australian dollar. The market has been in a downtrend since the end of 2023, with the AUD/USD price hovering near the upper boundary of the downward channel. Additionally, there is evidence of a symmetrical triangle pattern forming on the daily chart, indicating a temporary balance between supply and demand forces. The key level of 0.665, which previously acted as resistance, now serves as the central axis of the triangle.
Possible Bearish Scenario for AUD/USD Market
Yesterday’s and today’s candles may form a bearish engulfing pattern, signaling ongoing selling pressure above the 0.668 level. It is conceivable that bears will seek to break downwards from the consolidation triangle during June, potentially resuming the prevailing downtrend in the AUD/USD market. One of the key catalysts for this scenario to materialize is the upcoming FOMC meeting scheduled for June 12th.
The PMI Manufacturing indices have had a noticeable impact on the forex market, particularly on the US dollar and the Australian dollar. While the initial reaction led to a weakening of the US dollar, subsequent technical analysis suggests a potential bearish scenario for the AUD/USD market. Traders should closely monitor key levels and upcoming events to make informed decisions in the ever-changing forex landscape.