FXStreet (Bali) – The AUD/USD saw a massive 2+ cents rally off Wednesday’s lows, with the initial selling in response of a dovish RBA Governor Stevens, who hinted at the possibility of further policy easing, being completely erased by the BOJ Kuroda-led USD longs capitulation, resulting in a massive turnaoround to a daily high of 0.7784.
At present, and ahead of the Australian monthly employment figures, to be released at 1.30 GMT, the pair has eased over 65/70 pips from its highs, weighed by position squaring ahead of the risk event but mostly on the downward pressure being applied in the New Zealand Dollar, which is also dragging the Aussie lower in thin-liquidity this Thursday.
Australian jobs expected to edge up in May
According to Westpac’s FX Strategist Sean Callow: “Westpac is forecasting a 12k rise and the market median is 15k. Holding the participation rate flat at 64.8% and assuming constant population growth, this leaves the unemployment rate at 6.2%, rounded down. This suggests there is an upside risk in the unemployment rate.”
AUD/USD scenarios
Should an upbeat report be published, the key level of resistance to the upside is seen at 0.7750 – intraday references – followed by the more relevant 0.7765/70 – Wed’s highest volume node, macro offers noted – ahead of 0.78, where the selling pressure is though to increase even more significantly, as it represents the daily point of control. The atter figure is still serving as line in the sand being drawn by committed sellers, with a resolution higher on a daily close basis – not expected given RBA/Fed divergence – , resulting in a key technical breakout.
If the employment report disappoints expectations – always keep an eye on the divergence vs exp – , 0.77 handle should give in, with the immediate level of support located at 0.7650 – we’ve seen solid buying there recently – , ahead of 0.7630 – intraday horizontal level – and before a possible test of 0.76, where macro bids are thought to be parked.
AUD/USD technicals
Valeria Bednarik, Chief Analyst at FXStreet, notes: “A better-than-expected reading should give the Aussie a boost against its rivals. In the meantime, the 1 hour chart shows that the price remains well above its 100 SMA, albeit the technical indicators have lost upward strength, and turned south above their mid-lines.”
“In the 4 hours chart, the price stalled around its 200 EMA currently at 0.7780 and the immediate resistance, whilst the technical indicators have turned flat well above their mid-lines, and the price stands well above a bullish 20 SMA, all of which supports additional gains, particularly on a break above the mentioned 200 EMA”, Valeria adds.
(Market News Provided by FXstreet)