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AUD/USD Price Forecast: Could extend dismal Aussie jobs data-led slide amid modest USD strength

  • AUD./USD attracts sellers for the third straight day and is pressured by a combination of factors.
  • A weaker domestic jobs report gives the RBA headroom to cut rates and weighs on the Aussie. 
  • A modest US Dollar uptick exerts additional pressure on the pair and contributes to the decline.

The AUD/USD pair struggles to capitalize on the previous day's late rebound and meets with some support on Thursday, hitting a fresh weekly low during the first half of the European session. The Australian Dollar (AUD) drifts lower following the release of the domestic jobs report, which showed that the number of employed people declined by 52.8K in February, missing estimates for a 30.0K increase by a big margin. Meanwhile, the Unemployment Rate remained unchanged at 4.1% in February on the back of a drop in labour force participation. The report raised concerns about potential weakness in the labor market, which could provide the Reserve Bank of Australia (RBA) more room to lower interest rates.

Adding to this, a modest US Dollar (USD) uptick exerts additional downward pressure on the AUD/USD pair and contributes to the intraday slide. The Federal Reserve (Fed) decided to keep interest rates unchanged at the end of a two-day policy meeting on Wednesday and maintain its forecast for two 25 basis points rate cuts by the end of this year. Moreover, the Fed gave a bump higher to its inflation projection. This, along with the uncertainty over US President Donald Trump's trade tariffs and escalating geopolitical tensions in the Middle East, seems to underpin the safe-haven Greenback. This, in turn, drags spot prices away from a multi-week high, around the 0.6400 neighborhood, touched earlier this week.  

Any meaningful USD appreciation, however, seems elusive amid the prospects for further monetary policy easing by the Fed. In fact, Traders now see over a 65% chance that the Fed would resume its rate-cutting cycle in June. The expectations were reaffirmed by the Fed's updated economic projections published on Wednesday, which showed that policymakers trimmed their GDP forecast for the current year. Furthermore, a generally positive tone around the equity markets, bolstered by China's stimulus measures and hopes for a Ukraine peace deal, should cap the buck and lend support to the risk-sensitive Aussie. This, in turn, warrants some caution before placing aggressive bearish bets around the AUD/USD pair. 

Traders now look forward to the US economic docket – featuring the release of the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales data. This might influence the USD price dynamics and provide some impetus to the AUD/USD pair later during the North American session. The fundamental backdrop, meanwhile, makes it prudent to wait for strong follow-through selling in order to confirm that the AUD/USD pair’s recent move-up witnessed over the past two weeks has run out of steam. 

AUD/USD daily chart

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Technical Outlook

From a technical perspective, the AUD/USD pair has been struggling to find acceptance or capitalize on its move beyond the 100-period Exponential Moving Average (EMA). The subsequent slide warrants some caution for bullish traders. Meanwhile, neutral oscillators on the daily chart make it prudent to wait for a sustained break below the 0.6300 mark before positioning for additional losses towards last week’s swing low, around the 0.6260-0.6255 region. The downward trajectory could eventually drag spot prices to sub-0.6200 levels, to the monthly swing low. 

On the flip side, the 0.6265 area, or the 100-day EMA now seems to act as an immediate strong barrier ahead of the weekly high, around the 0.6390 area. A sustained strength beyond and a subsequent move above the 0.6400-0.6410 region could be seen as a fresh trigger for bullish traders. The AUD/USD pair might then climb to the 200-day Simple Moving Average (SMA), currently pegged around mid-0.6400s, before aiming to reclaim the 0.6500 psychological mark. 

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Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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