Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6800.
Add a stop-loss at 0.7000.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.700.
Add a stop-loss at 0.6800.
The AUD/USD exchange rate was little changed on Thursday as traders waited for the upcoming US non-farm payrolls (NFP) data. It was trading at 0.6887, much lower than the year-to-date high of 0.7278.
US to Publish NFP Data
The AUD/USD pair will be in the spotlight in the next few hours as the Bureau of Labor Statistics (BLS) releases the latest non-farm payrolls (NFP) report. Economists expect this report to show that the economy added over 114k jobs last month. They also expect the data to show that the unemployment rate remained unchanged at 4.3%.
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US jobs numbers have beaten estimates in the last three consecutive months, raising the possibility the trend will continue today. If this happens, it means that the Fed has room to maintain interest rates at the current level for longer than expect.
A report released by ADP on Wednesday showed that the economy added 98k jobs in June, missing what analysts were expecting. Another report showed that the US manufacturing PMI remained above 50 during the month.
The AUD/USD pair reacted to Kevin Warsh’s statement at the European Central Bank (ECB) forum in Portugal. While he did not provide hints on what to expect from the bank, he maintained that it would maintain its independence.
He also pointed to the Supreme Court, which singled out the bank, for its independence. The court ruled that the US president cannot fire a Fed official easily as Trump attempted to do with Lisa Cook.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has formed a series of lower lows and lower highs. It has also formed a small bearish flag pattern, which is made up of a vertical line and a horizontal channel.
The pair has already dropped below the 200-day Exponential Moving Average (EMA), a sign that bears are gaining momentum. It has moved below the Ichimoku cloud and is approaching the crucial support level of 0.6828. This support aligns with the neckline of the double-top pattern.
Therefore, the pair will likely remain under pressure in the coming days. If this happens, the initial target to watch will be at 0.6828. A break below that level will point to further downside, potentially to 0.6750.
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