Bearish View
- Sell the AUD/USD pair and set a take-profit at 0.6000.
- Add a stop-loss at 0.6270.
- Timeline: 1-2 days.
Bullish View
- Buy the AUD/USD pair and set a take-profit at 0.6270.
- Add a stop-loss at 0.6000.
The AUD/USD pair continued its downtrend and hit its lowest level since April 2020 as its sell-off gained steam. It dropped to a low of 0.6145 after the strong US jobs numbers pushed the dollar index to its highest level in years. The focus now shifts to the upcoming US inflation and Australian jobs numbers.
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US Dollar Index Rises Ahead of Inflation Data
The AUD/USD exchange rate continued its strong downward momentum as the US dollar index soared. It moved to $109.3, its highest level in over two years. This jump also happened in the bond market where yields rose sharply.
The surge happened after the US published strong nonfarm payrolls (NFP) data on Friday. According to these numbers, the Bureau of Labor Statistics (BLS) showed that the unemployment rate dropped to 4.1% in December.
The economy created over 256k jobs in December, higher than the 212k it made in November and the 152k jobs that analysts were expecting.
These numbers mean that the Fed’s concerns about the labor market have eased. Its biggest concern is that inflation has remained at an elevated level. Therefore, the next key data to watch will be the upcoming US consumer inflation data scheduled on Wednesday.
Economists expect the data to show that the headline Consumer Price Index (CPI) rose from 2.7% in November to 2.9% in December. Core inflation, which excludes the volatile food and energy products, is expected to move from 3.3% to 3.4%.
If these estimates are correct, they will signal to a more hawkish Federal Reserve, which explains why the US dollar has jumped.
The other notable AUD/USD catalyst will be Australia’s jobs numbers scheduled on Thursday this week. These numbers will provide more information about the state of the economy.
AUD/USD Technical Analysis
The AUD/USD pair continued its strong downward trend and moved to its lowest level since 2020. It dropped below the crucial support level at 0.6272, its lowest level since October 2023, and the neckline of the double-top pattern.
The pair has moved to the strong pivot reverse point of the Murrey Math Lines and has dropped below the 50-day and 25-day moving averages.
Also, the Relative Strength Index (RSI) and the MACD indicators have continued pointing downwards. Therefore, the pair will likely continue falling as bears target the weak stop & reverse point at 0.6000.
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