The AUD/USD turned bearish early in 2021, and the decline picked up pace in the second half of last year, as the USD gained confidence on the hawkish FED, which sent this Forex pair below $0.70. In the first two months of this year we saw a retreat higher, but this month, the conflict in Ukraine turned the sentiment negative for risk assets, such as the AUD, although commodity prices have been surging.

Yesterday, the FED delivered the first rate hike since 2018, which came after the largest accommodative policy in history, which accounts for tens of trillions of dollars. The FED increased interest rates by 25 bps, from 0.25% to 0.50%, although the USD declined, which means that the market was perhaps expecting a 50 bps hike this time.

However, current expectations are for a 50 bps hike in the next meeting, which is scheduled for May, after the dot plot implied seven rate hikes this year, from five in the previous meeting. But the mood for this pair was also helped by Chinese comments of support for the domestic equities. AUD/USD bounced off the 50 SMA (yellow) and the 100 SMA (green), and now it is heading for the 200 daily SM (purple).

AUD/USD Daily Chart – The 100 SMA Has Turned Into Support

The 50 and 100 SMAs have turned into support for AUD/USD

Australian Employment Report for February

• February employment change +77.4K vs +37K expected +37K,
• January employment change was +12.9K
• February unemployment rate: 4.0% vs expected 4.1%,
• January unemployment rate was 4.2%
• The lowest rate since August 2008
• Full-time employment change: +121.9K
• January employment change was -17K
• Part-time employment change: -44.5K
• January paart-time change was +30K
• Participation rate: 66.4%, at record high vs 66.3% expected
• January participation rate was 66.2%
• Underemployment rate decreased to 6.6%.
• Monthly hours worked increased by 149 million hours (+8.9% on the month)

AUD/USD Live Chart