AUD/USD: Bulls are in the clear, moving through a key area towards 0.7260

• AUD/USD bulls stay in the driver's seat and eye a strong move through the 0.72s.
• Bulls are now in the clear and target 0.7260. 

At 0.71944, AUD/USD is testing through a key resistance area on the daily chart following a solid start to the week so far. The Aussie has been underpinned by risk assets that have been in demand as investors get incentivised by the gradual easing of the lockdown in China. Moreover, the pricing of a Fed pause allows interest to return to FX carry trades which is supporting the antipodeans. The greenback has dipped in reflection of speculation that the Fed may take a pause in its rate hiking cycle in September.

Equity markets trended up overnight but gains, particularly in Europe, which too was supportive of the high beta AUD. However, it was a slow day in New York with the Memorial Day holiday in the US which meant no new data was released from there. 

With a focus on the Chinese easing of lockdowns, analysts at ANZ Bank explained in a note that they are starting to ease as COVID-19 cases fall. ''This will help boost economic activity, not only in China, but also in the countries which rely on China for trade. China is expected to release additional fuel into the global market to help clear its stockpiles,'' the analysts said.

''Beijing has also announced measures to try to stimulate economic activity through additional government spending on infrastructure, speeding up approvals for property purchases, making it cheaper for consumers to purchase cars, subsiding wages in certain industries, and reducing taxes.''

Meanwhile, there will be attention paid to today's data release in PMIs from China. ''Both PMIs are likely to remain in contraction,'' analysts at TD Securities said. ''Partial easing in lockdown measures will help reduce some negative sentiment in manufacturing. However, weaker export trends, lacklustre demand for loans, and soft infrastructure spending suggest manufacturing will not move back to expansion quickly. Services recovery is likely to be even slower amid constrained consumer activity.''

AUD/USD technical analysis

As per the pre-open analysis at the start of this week, AUD/USD Price Analysis: Bulls move into a critical area on H4 charts, eye a run to the 0.7250/60s the bulls stay with the course as illustrated:

AUD/USD pre-open analysis

It was explained that the price had been respecting the support structures ''in its pursuit of the price imbalance between recent highs and the May 4 highs at 0.7266. The price would be expected to mitigate this area of imbalance with relative ease.''

AUD/USD live update