More Downside Ahead of US NFP Data

The pair will likely resume the bearish trend as sellers target the important support at 0.6850.

Bearish View

  • Set a sell-stop at 0.6920 and a take-profit at 0.6850.
  • Add a stop-loss at 0.7020.
  • Timeline: 1-2 days.

Bullish View

  • Set a buy-stop at 0.6970 and a take-profit at 0.7060.
  • Add a stop-loss at 0.6850.

The AUD/USD price remains significantly below its highest this week as investors reflected on the latest Reserve Bank of Australia (RBA) decision. The pair dropped to 0.6945, which was about 1.40% above the lowest level this week.


US Jobs Data Ahead

The AUD/USD pair retreated after the RBA delivered its August interest rate decision. The bank decided to hike interest rates by 0.50%, meaning that it has increased rates four times this year. This is the most hawkish that the bank has been in decades.

The pair declined as investors worried about the pace of future interest rates since there are signs that inflation is peaking. For example, the price of crude oil has dropped from a year-to-date high of over $135 to less than $100.

Some analysts believe that oil prices will continue falling as OPEC+ hikes production. This is notable since oil is the biggest part of inflation in Australia and other countries. Moreso, the RBA warned that the country’s economy will continue slowing down in the coming months. The RBA will publish its minutes on Friday.

The next key catalyst for the AUD/USD price will be the upcoming US jobs data and statements by Fed officials. This week, officials like Charles Evans of Chicago and Lorretta Meister said that the Fed would continue hiking interest rates even as strains to the American economy remain.

For example, there are signs that the housing sector is slowing after data showed that new and existing home prices dropped sharply in June.

The US will publish the official jobs data on Friday. Economists expect these numbers to show that the country’s economy added fewer jobs in July than in the previous month while the unemployment rate remained unchanged at 3.7%.

AUD/USD Forecast

The four-hour chart shows that the AUD/USD pair made a strong bearish breakout on Tuesday after the latest RBA decision. The pair managed to move below the lower line of the ascending channel. It also moved slightly below the 25-day and 50-day moving average. The Relative Strength Index (RSI) has moved to the neutral point.

Therefore, the pair will likely resume the bearish trend as sellers target the important support at 0.6850. This is both an important psychological level as well as the lowest point on June 14th.


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