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AUD/USD jumps to its highest level since February amid USD weakness

  • AUD/USD sets a sixth consecutive day of gains, jumping to the 0.6870 area.
  • Strong US Retails Sales and Jobless Claims data support a dovish Fed.
  • Falling US yields and a positive market sentiment favour the AUD.

On Thursday, the AUD/USD pair surged to its highest level since February, gaining 90 pips. In that sense, post the release of US Retail Sales and Jobless Claims data, falling US bond yields and a positive market sentiment weakened the US Dollar and favoured the AUD.

US Economic activity data post-Fed decision weakened the USD Dollar

The latest data from the US Census Bureau revealed a surprising expansion in Retail Sales, surpassing expectations as they increased by 0.3% MoM in May, defying the anticipated contraction of 0.1%. Furthermore, Jobless Claims for the week ending June 9 rose to 262,000, slightly higher than the forecasted 249,000 and the same as the previous week's reading of 262,000.

In Wednesday’s session, the Fed decided to hold rates steady in order to assess additional information regarding its implication on monetary policy. In addition, Fed Chair Powell, in the press conference, stated that the labour market remains robust and drives the US economy, so weakness in this area makes investors think that the Fed may take a more dovish stance for its next meetings.

Reacting to the data, US bond yields are seeing losses across the curve. The 10-year bond yield slid to 3.75% while the 2-year yield stood at 4.68% and the 5-year yields at 3.95%, with all three seeing declines of between 0.30-1%, applying further pressure to the US Dollar. Stocks, on the other hand, continued to trade strong, with the S&P 500 (SPX) gaining over 0.40%, signalling a positive market environment.

AUD/USD Levels to watch

Technically speaking, the AUD/USD maintains a clear bullish outlook for the short term, as the pair managed to rally above the 20,100 and 200-day Simple Moving Averages (SMA) and the technical indicators suggest that the buyers have the upperhand. However, the pair approaches overbought conditions, suggesting that a downward correction may be on the horizon.

In case the AUD/USD continues to gain traction, the following resistance line up at the daily high at 0.6875, followed by the psychological mark at 0.6900 and the 0.6950 area. On the other hand, to the downside, the next support levels to watch are the 100-day Simple Moving Average (SMA) at 0.6730, followed by the 200-day and 20-day SMA at 0.6690 and 0.6630, respectively.

AUD/USD Daily chart

AUD/USD

Overview
Today last price0.6875
Today Daily Change0.0079
Today Daily Change %1.16
Today daily open0.6796
 
Trends
Daily SMA200.6627
Daily SMA500.6664
Daily SMA1000.6732
Daily SMA2000.6691
 
Levels
Previous Daily High0.6836
Previous Daily Low0.6756
Previous Weekly High0.6751
Previous Weekly Low0.6579
Previous Monthly High0.6818
Previous Monthly Low0.6458
Daily Fibonacci 38.2%0.6805
Daily Fibonacci 61.8%0.6786
Daily Pivot Point S10.6756
Daily Pivot Point S20.6716
Daily Pivot Point S30.6676
Daily Pivot Point R10.6836
Daily Pivot Point R20.6875
Daily Pivot Point R30.6915

Author

Patricio Martín

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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