AUD/USD Jumps 0.68 After Jobs Surge – Is $0.69 the Next Target?
The Australian dollar has continued its winning streak right through the European session, with AUD/USD rising to $0.6865...
Quick overview
- The Australian dollar has reached its highest level this month at $0.6865, driven by strong domestic economic data and a weakening US dollar.
- Recent economic indicators, including a significant rise in the Composite PMI and a drop in unemployment to 4.1%, suggest robust growth in Australia.
- Technical analysis shows AUD/USD has broken above a trendline, indicating strong demand and a bullish momentum in the market.
- Key levels to watch include resistance at $0.6898 and support at $0.6830, with a trade idea to buy on dips around $0.6830.
The Australian dollar has continued its winning streak right through the European session, with AUD/USD rising to $0.6865 – its highest level this month. This move is a pretty big deal, folks, because it shows that domestic data in Australia is looking strong and the US dollar is losing steam, pushing the pair into a zone that traders are now watching with great interest.
Despite the rally being pretty sharp, the price action doesn’t really suggest this is just a short-term bounce. On the contrary, the market seems to be increasingly of the view that recent pullbacks are just opportunities to get on board rather than a warning sign that the party is over.
The Case for the Aussie Just Got a Lot Stronger
The latest economic releases from Australia were a bit of a game-changer. The January S&P Global Manufacturing PMI shot up to 52.4, up from 51.6, and the Services PMI surged to 56.0 from 51.1. And when you put these two together, you get a Composite PMI of 55.5 – it’s the strongest read in months – which is a pretty clear sign that the economy is growing in all directions.
The labour market data wasnt just a one-off either. Australia added 65.2K jobs in December – a much bigger number than anyone was predicting – and the unemployment rate fell to 4.1%, which is a pretty impressive result.
That all adds up to a big plus for the Australian dollar. Economies are growing, the labour market is strong, and it’s all pointing to the Reserve Bank of Australia keeping interest rates high for a bit longer, which in turn helps keep the Aussie supported.
The US Dollar Loses Its Mojo
On the US side, the dollar just can’t seem to get any traction. Even though the recent data has been pretty solid – including 4.4% GDP growth in Q3 and the jobless claims still ticking over at around 200K – investors just aren’t getting all that excited. Core PCE inflation is running at 2.8% year on year, exactly as expected, so that tends to rule out any further rate hikes.
A bit of geopolitical uncertainty weighed on sentiment, but once that blew over, thanks to easing rhetoric around Greenland, risk appetite stabilised again. The problem is, the dollar just hasn’t been able to claw back those recent highs, so the Aussie has kept going up.
AUD/USD Technical Analysis: Breaks Trendline, Momentum Builds
From a purely technical perspective, AUD/USD has broken above the trendline that had been limiting the pair earlier in January. And when you take a look at the 4-hour chart, those bullish candlesticks with some real meat on the bodies and not many lower wicks suggest genuine demand rather than a short-covering spike.
Price is happily holding above that 1.618 extension near $0.6830, which is now the first line of support. Looking at the bigger picture, the structure has shifted into an ascending channel, with higher lows forming just above that $0.6790-$0.6765 demand zone. And the 50-EMA is now turning higher, while that 200-EMA is still all the way down at $0.6685 – that’s a pretty clear sign that the trend is on our side.
Momentum is pretty high, but it’s an orderly sort of high. RSI is above 75, which is a pretty strong buy signal, but there’s no bearish divergence in sight, which does suggest that you might just get a shallow pullback or a bit of consolidation rather than a full-blown reversal.
Key levels to watch:
- Resistance: $0.6898, then $0.6930
- Support: $0.6830, then $0.6765
Trade idea: Buy on dips around $0.6830, target $0.6930, stop below $0.6765
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