Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6750.
- Add a stop-loss at 0.6660.
- Timeline: 1 day.
Bearish view
- Set a sell-stop at 0.6670 and a take-profit at 0.6600.
- Add a stop-loss at 0.6770.
The Australian dollar jumped on Friday as the US dollar index slumped after the weak American jobs report. The AUD/USD pair rose to the important resistance point at 0.6700, which was higher than last week’s low of 0.6600.
US dollar index retreats
The US dollar index jumped while stocks slipped on Friday after ADP published a strong job report. In its report, the company said that the American private sector added over 400k jobs in June, higher than median estimates.
The strong data pushed more investors to predict that the Federal Reserve would hike rates up by as much as 50 basis points in July. That sentiment changed on Friday when the Bureau of Labor Statistics (BLS) published a weak jobs report.
According to the BLS, the economy added 209k jobs in June, lower than the median estimate of 230k jobs. The number was also lower than what the country created in May. Also, the bureau downgraded its estimates for its May and April reports.
Still, despite the jobs report miss, analysts believe that the Fed will continue hiking rates this month. In contrast, the Reserve Bank of Australia (RBA) did last week when it left interest rates unchanged.
There will be no important data from the US and Australia on Monday. Therefore, the AUD/USD pair will react to the upcoming statements by three Fed officials. Mary Daly, Loretta Mester, and Raphael Bostic will all talk, two days after the jobs report.
The other important data to watch will be the upcoming US consumer inflation data scheduled for Wednesday. The data will provide more details about the state of inflation in the US and whether the downward trend continued.
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AUD/USD technical analysis
The Australian dollar bottomed at 0.6570 in June and struggled to move below it last week. On the 4H chart, the pair has moved above the 50% Fibonacci Retracement level. It has broken out above the 25-day and 50-day moving averages and is nearing the important resistance level at 0.6706, the highest level on July 4th.
The Relative Strength Index (RSI) has moved above the neutral point at 50. Therefore, the pair will likely continue rising if bulls manage to move above the resistance point at 0.6706. If this happens, the next level to watch will be at 0.6800.
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