AUD/USD Price Forecast: Holds 0.6630 Support as NFP Looms
During the European session the AUD/USD dropped for the fourth day in a row, now hovering around the 0.6635 mark - a 0.1% loss.
Quick overview
- The AUD/USD has dropped for four consecutive days, currently at 0.6635, reflecting a 0.1% loss amid declining risk appetite.
- Mixed Australian labor data and a significant slowdown in China's manufacturing are contributing to uncertainty about demand in Australia.
- The Reserve Bank of Australia's strict monetary policy is preventing a larger decline in the Aussie dollar, maintaining a cash rate of 4.35%.
- Technical indicators suggest consolidation in the AUD/USD, with key support at 0.6630 and resistance at 0.6679, while upcoming US labor data could influence future movements.
During the European session the AUD/USD dropped for the fourth day in a row, now hovering around the 0.6635 mark – a 0.1% loss. The pair is still under pressure after failing to hold its ground above last week’s highs at 0.6680, as investors suddenly lost risk appetite and began rethinking the positive signs of Australia’s and China’s economic growth we had been seeing.
Australian and Chinese Data in Focus
The latest labour numbers from Australia were mixed. On the one hand, a small increase in employment, but on the other hand, full time job creation is still pretty flat, and unemployment is still sitting pretty high, which just adds fuel to the uncertainty about the state of demand in Australia. Meanwhile, Chinas latest manufacturing and activity numbers showed a much larger slowdown than we had been expecting, and that is just bringing home the reality of how important Chinas market is to Australias exports. All of which is keeping a lid on the Aussie dollar, and getting traders to think defensively.
RBA Policy – Still Keeping the Downside in Check
Despite all the gloomy data, RBA policy is still doing its job in stopping the Aussie from falling too far. Governor Michele Bullock made it clear that the RBA isnt about to cut interest rates anytime soon, and that it will do what it needs to do if inflation is about to start rising again. Given the cash rate is still at 4.35% the RBA remains one of the strictest among the major central banks, and that is helping to keep the Aussie above the 0.6600 level.
A Bit of Help from a Weak Dollar
And on the flip side, the US Dollar has been losing value, with the US Dollar Index hovering just above 98.3, its lowest level since early October. So when you combine all that with the fact that interest rate markets are now pricing in at least two US Fed cuts by the end of 2026, its no wonder the AUD/USD isnt falling off a cliff just yet.
AUD/USD Technical Outlook
Technically speaking the AUD/USD is still in an overall uptrend, trading inside an upward sloping channel that has been guiding the price action since late November. BUT – in the short term things have slowed down, and price has now slipped below its 50-day moving average at 0.6645, which is now also the immediate support level.
Looking at recent price action, the candles show small bodies and mixed wicks, suggesting consolidation rather than a big selloff. The RSI has also cooled down a bit to 43-44, and that is just a healthy pullback from overbought territory – not a sign of the trend coming to an end.
Key levels to watch are:
- Support is at 0.6630, then 0.6595
- Resistance is at 0.6679, followed by 0.6710
If the price does bounce off the 100-day moving average, then we might see a push back up towards the upper end of that channel – but if it breaks clean below 0.6595, then we could be looking at a more serious pullback.
US Labour Data in the Spotlight
Now all eyes are on the US Nonfarm Payrolls number, which is forecast to be just 51K – which is a huge drop from the previous 119K. If it does come in that low, that puts some pressure on the dollar and may start to stabilise the AUD/USD – but if it comes in stronger, that could send the AUD/USD back down.
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