AUD/USD Drops Below 0.6480 Amid Weak Aussie Jobs Data and Strong USD
The AUD/USD pair has been under persistent pressure, trading near 0.6475 and touching an intraday low of 0.6460.
This downward movement is largely driven by Australia’s weaker-than-expected employment growth and a slight decline in the participation rate. The October employment report showed only a 15.9K increase in jobs, a steep drop from the 61.3K surge in September, with the participation rate dipping to 67.1%. Although full-time positions rose by 9.7K, the overall pace of job growth is slowing, raising concerns about Australia’s economic resilience.
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Despite hawkish remarks from RBA Governor Michele Bullock, who emphasized the bank’s commitment to keeping interest rates restrictive until inflation is contained, the weak labor data has overshadowed these efforts. Prime Minister Anthony Albanese’s recent trade discussions with U.S. President-elect Donald Trump underscored Australia’s trade and security investments, but these factors have yet to bolster the Australian dollar meaningfully.
US Dollar Gains on Trump’s Win and Strong CPI Data
The U.S. dollar remains robust, with the U.S. Dollar Index (DXY) sitting around 106.60, its highest point since November 2023. Donald Trump’s election victory has stoked optimism about inflationary economic policies, including possible trade tariffs, which could add upward pressure on U.S. inflation. This speculation is further supported by recent U.S. CPI data for October, showing a 2.6% year-over-year increase and a core CPI rise of 3.3%, both meeting forecasts. These figures reinforce the Fed’s cautious approach to rate cuts, adding strength to the greenback.
Fed Chair Jerome Powell recently stated that Trump’s return to the White House would not affect the Fed’s short-term policies. Following a recent rate cut, Powell emphasized that the Fed’s decisions are insulated from political influences. The strong U.S. dollar, buoyed by robust CPI data and market optimism, continues to weigh heavily on the AUD/USD pair, limiting any potential recovery for the Australian dollar.
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AUD/USD Technical Outlook: Further Downside Possible
Technically, the AUD/USD remains in a strong downtrend. The pair recently broke below a critical support level at 0.6548, which now acts as resistance. Immediate support lies at 0.6432, with additional levels at 0.6392 and 0.6349, indicating potential for further declines.
The Relative Strength Index (RSI) at 35 suggests that the pair is approaching oversold territory, which could trigger a short-term rebound. However, with prices trading well below the 50-day Exponential Moving Average (EMA) at 0.6700, the overall bias remains bearish.
For traders, a potential short position might be considered below 0.6495, targeting 0.6432, with a stop-loss set above 0.6548. This setup aligns with the prevailing downtrend and points to further downside unless the pair can break back above the 0.6548 resistance. However, the oversold RSI could support a temporary bounce, though the general outlook still favors sellers in the near term.
Key Points:
- Jobs Data Impact: Australia’s October employment growth was weaker than expected, with a 15.9K increase in jobs.
- USD Strength: Strong U.S. CPI data and Trump’s election win support the dollar.
- Technical Outlook: AUD/USD remains bearish, with support near 0.6432 and resistance at 0.6548.
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