Remaining Short on AUD/USD As Jobs Report Disappoints
AUD/USD has been making lower highs since it reversed lower more than a month ago. It seems that selling pressure comes as a result of a combination of factors, with a significant contributor being the disappointing Australian jobs report released earlier which gave this pair another push lower, before making a reversal higher later in the European session as the USD weakened.
Concerns are also growing surrounding the Chinese economy and the weakening value of the Yuan currency. Although the Yuan is getting a break today which has been helping risk currencies, sending this pair to around 0.6450. Although that’s where the 20 SMA (gray) comes on the H4 chart, which has been acting as resistance and it seems like the price is pulling back down now.
From a technical analysis perspective, the AUD/USD currency pair’s daily break below the 0.6500 level this week and the subsequent confirmation break below the May low of 0.6458 have been very favorable for traders who follow technical indicators. This move builds on trends that have been in play since the middle of July, as we mentioned above.
The H4 chart illustrates that there appears to be limited resistance on the way to a potential decline toward the 0.6200 level. Given the current market conditions, it’s quite plausible to anticipate this level being reached soon unless there’s a reversal in the bond market. Notably, the formation of a double-top pattern at the 0.6900 level suggests that a move down to at least 0.6300 is in the cards. This level could serve as the initial point of support. We already decided to open another sell AUD/USD signal after the retrace higher seems to be fading, since we have been very profitably following this strategy.
Australian July Employment Report
- July unemployment rate 3.7% vs 3.5% expected
- June unemployment rate was 3.5%
- Participation rate 66.7% vs 66.8% expected/previously
- Employment change -14.6K against 15K expected
- Previous employment change was 32.6K
- Underutilization rate is 10.1%, another indication of weakness, back to March 2022 highs
AUD/USD Live Chart
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