AUD/USD defends 200-day MA support despite big miss on China PMI

• China manufacturing PMI prints well below estimates.
• Aussie under pressure, but is still holding above the 200-day MA.

China February official manufacturing PMI came in at 50.3, missing the estimate of 51.2 and down from the previous month's print of 51.3. Meanwhile, the services PMI printed at 54.4 vs. estimates of 55.00 and down from the January figure of 55.3.

The Aussie dollar, which is widely considered as a proxy for China, backed-off from the session high of 0.7799 immediately after the data release. However, so far, the pair has been able to defend the 200-day moving average (MA) support of 0.7781.

Moreover, the weakness in the China PMI is being associated with the Lunar New Year Holidays, meaning the pace of expansion in the activity is expected to normalize in the coming months. This explains the resilience in the Aussie dollar.

That said, the 200-day MA support could be breached soon if the market attention shifts to the negative Aussie-US 10-year bond yield spread.

AUD/USD Technical Levels

Jim Langlands from FX Charts says, "the momentum indicators are all looking heavy on Wednesday, so trading from the short side and selling rallies is preferred. If we do see a squeeze higher, look to sell at around 0.7825, hoping for a return to 0.7760/70 which should be decent support if/when we get there. We may not see a rally, and a break of 0.7760 will target 0.7745 and then there is little to hold the Aud up until 0.7650 (76.4% of 0.7501/0.8135)."