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AUD/USD ignores below-forecast NAB data, eyes gains on bull RSI divergence

  • AUD/USD is reporting marginal gains despite below-forecast NAB data. 
  • The 14-day RSI is reporting a bullish divergence. 
  • That alongside the uptick in the equities could help the Aussie eke out notable bounce. 

AUD/USD is showing signs of life and could gain altitude during the day ahead. 

To start with, the pair has barely moved in response to the dismal data released a few minutes before press time. The National Australia Bank's Business Confidence for January came in at -1, missing the expected print of 0, but slightly up from the previous month's -2 reading. 

Meanwhile, the Business Conditions index remained unchanged at 3, also missing the forecast for a slight rise to 4. 

The lackluster reaction to the below-forecast numbers indicates the market may be done pricing the bad news. 

Further, the daily chart indicators are turning bullish. Notably, the pair created an inverted hammer-like candle on Monday, validating the higher low (confirming bull divergence) on the relative strength index (RSI). 

Add to that the signs of risk reset in the markets and the AUD/USD pair looks set for a notable bounce. The US equity markets rallied on Monday with the S&P 500 adding 0.73%.

That said, big gains may remain elusive as there could be a pullback in hiring in the near term due to the ongoing weakness in the business activity. At press time, AUD/USD is trading at 0.6690, representing marginal gains on the day. 

Technical levels

 

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