Bullish Case
Set a buy stop at 0.7800 (top of the cup and handle pattern).
Add a take-profit at 0.7900 and a stop-loss at 0.7770.
Bearish Case
Set a sell-stop at 0.7723 (this week's low).
Add a take-profit at 0.7650 and a stop loss at 0.7600.
The AUD/USD price is wavering after the mixed employment numbers from Australia and the recent strong numbers from the United States. The pair is trading at 0.7750, slightly lower than this week's high of 0.7800.
Australia Employment Numbers
The Australian economy added more than 29,000 jobs in January as the country continued to reopen its economy. This increase was lower than the median estimate of 40,000 and the previous month's increase of 50,000. In total, the country has more than 12.9 million workers.
The unemployment rate declined to 6.4% from the previous 6.6% while the participation rate fell to 66.1%. The underemployment rate fell to 8.1%.
These numbers came a few days after the Reserve Bank of Australia (RBA) published the latest minutes. The committee concluded that more monetary and fiscal support will be needed to steer the country in the right direction. Already, the Morrison government has announced plans to tighten its monetary support.
The AUD/USD is also wavering because of the recent performance of the US dollar. The currency has risen for the past three days straight as investors start pricing-in higher inflation. Already US treasury yields have started rising, which is a sign that the market expects higher rates sooner.
Yesterday, the US released strong retail sales numbers helped by the recent stimulus. In total, the sales rose by 7.1% while the core retail sales rose by 5.8%. This means that the sales will continue rising if the US passes the $1.9 trillion stimulus package that Joe Biden has suggested.
Looking ahead, the AUD/USD price will react to the latest jobless claims, housing, and building permits numbers that will come out later today. The pair will also react to the flash manufacturing and Service PMI numbers from Australia and the United States that will come out tomorrow.
Further, analysts will be watching the action in the commodities market since the Aussie is often seen as a proxy for commodities.
AUD/USD Technical Outlook
The AUD/USD pair rose to a high of 0.7800 this week and then pulled back to a low of 0.7724. The highest point this week was an important resistance level since it was also the highest level on January 14.
On the four-hour, the pair seems to have formed a cup and handle pattern. Indeed, the current price action seems like the formation of the handle part of the pattern.
Therefore, the pair may resume the upward trend in the near term. If this happens, the next level to watch is the highest point this week.
