Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6150.
- Add a stop-loss at 0.6390.
- Timeline: 1-2 days.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6390.
- Add a stop-loss at 0.6200.
The AUD/USD exchange rate crashed for four straight days and neared a key support level after the weak Australian jobs data. It dropped to a low of 0.6272, down from this month’s high of 0.6390.
Odds of RBA rate cuts rise
The AUD/USD pair retreated sharply after Australia published weak jobs data. According to the statistics agency, the economy lost 52.8k jobs in February after adding 30.5k jobs a month earlier. The job losses were much less than the median estimate of 30.8k.
The report also revealed that the participation rate dropped from 67.2% in January to 66.8% in February, missing the expected 67.3%. At the same time, the unemployment rate remained at 4.1%.
These numbers signal that the economy is softening, which could continue as Donald Trump’s tariffs continue. Trump has vowed to implement reciprocal tariffs on imports from most countries, including Australia and China.
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Therefore, economists anticipate that the Reserve Bank of Australia (RBA) will deliver another rate cut in the next meeting on April 1. It slashed rates for the first time since 2020 in its last meeting.
The AUD/USD pair also retreated after the Federal Reserve delivered its interest rate decision. Jerome Powell and his team decided to leave them unchanged as was widely expected. Officials also signaled that they will deliver at least two cuts later this year.
Looking ahead, Australia will have no major economic data this week. Instead, the market will focus on the United States. The first data to watch will be the upcoming US consumer confidence report. The other key data to watch will be the upcoming US personal consumption expenditure (PCE) report on Friday. PCE is an important inflation data that includes urban and rural areas.
AUD/USD technical analysis
The AUD/USD pair has been in a strong downtrend in the past few days. It has dropped in the past four days and slipped below the 50-day moving average. The two lines of the MACD indicator have dropped and are nearing the zero line.
Also, the two lines of the MACD indicator have dropped and are nearing the neutral point at 50. The pair has formed a bearish flag pattern, a popular continuation sign. Therefore, the pair will likely continue falling as odds of diverging policies between the Fed and the RBA rise.
A bearish breakout will see it drop to the next psychological point at 0.6200. A move above the 50-day moving average at 0.6315 will invalidate the bearish outlook.
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