AUD/USD clings to 0.7800 after hitting 6-week lows

• AUD/USD struggles to hold above 0.7800
• Chinese inflation data eyed

The australian dollar has managed to recover slightly and climbed back above 0.7800 in recent dealings, after hitting a 6-week low.

The pair has fallen sharply over the last days ever since peaking at 0.8135 on Jan 25.  Having dropped more than 400 pips, and posting eight daily losses in nine days, AUD/USD bottomed out at 0.7781, its lowest since Dec 28. However, the downside was contained by the 100-day SMA, allowing the Aussie to climb back above 0.78, to currently trade at 0.7810, down 0.20% on the day.

“The Aussie took an early hit from Chinese December trade balance data, as the surplus shrunk sharply, down to 135.80B in Yuan terms from the previous 361.98B,” said Valeria Bednarik, chief analyst at FXStreet. “This Friday, Australia will release some housing figures, alongside with the RBA Monetary Policy Statement from the latest meeting, but the pair will probably be more influenced by Chinese January inflation, seen up in the month 0.2% from a previous gain of 1.1%, while the YoY reading is expected at 4.4% from the previous 4.9% advance.”

AUD/USD levels to watch

In terms of technical levels, next supports are seen at 0.7775 (100-day SMA), 0.7747 (200-day SMA) and 0.7700 (psychological level). On the flip side, resistances could be found at 0.7909 (Feb 7 & 6 highs),  0.7953 (Feb 5 high) and 0.7975 (21-day SMA).