AUD to USD Forecast: Bears Eye Sub-$0.65 on Hawkish Fed Chatter

Highlights

• This morning, investors will respond to the US Jobs Report ahead of another pivotal week for the greenback.
• Beyond the economic calendar, Fed chatter, government bond yields, and China stimulus chatter will also need consideration.
• The near-term technical indicators remain bearish, signaling a return to sub-$0.6550.

On Friday, the AUD/USD gained 0.21% to end the day at $0.65639. Falling US Treasury yields and the US Jobs Report supported a bullish end to the week.

This morning, there are no economic indicators from Australia or China for investors to consider. The lack of stats will leave the US Jobs Report to resonate ahead of another pivotal week for the greenback.

With no economic indicators to provide direction, government bond yields need monitoring throughout the session. Easing market tensions over the US sovereign rating downgrade should support the Aussie dollar. However, recessionary jitters will likely cap the upside.

The US Session

There are no US economic indicators to influence. The lack of economic indicators will leave Fed chatter in focus. FOMC members Harker and Bowman are on the calendar to speak today. After the US Jobs Report, forward guidance will move the dial.

The US unemployment rate fell from 3.6% to 3.5%, with average hourly earnings rising by 4.4% year-over-year. With the Fed’s dual mandate, labor market conditions must soften considerably to impact wage growth and ease demand-driven inflationary pressures. Hawkish chatter would fuel bets on a Fed September rate hike.

AUD/USD Price Action

Daily Chart

The Daily Chart showed the AUD/USD hover above the $0.6545 – $0.6526 support band. However, despite the bullish session, the Aussie remained below the 50-day ($0.66961) and 200-day ($0.67426) EMAs, sending bearish near and longer-term price signals.

The 50-day EMA fell further from the 200-day EMA, sending bearish price signals.

Looking at the 14-Daily RSI, the 38.98 reading signals a bearish trend and supports a fall through the 0.6545 – 0.6526 support band to target sub-$0.65. However, an AUD/USD move through the $0.6620 – $0.6600 resistance band would give the bulls a run at the $0.6680 – $0.6700 resistance band and the 50-day EMA ($0.66958).

4-Hourly Chart

Looking at the 4-Hourly Chart, the AUD/USD sits above the $0.6545 – $0.6526 support band. However, the AUD/USD remains below the 50-day ($0.66356) and 200-day ($0.66961) EMAs, sending bearish near and longer-term price signals.

Significantly, the 50-day EMA pulled back from the 200-day EMA, supporting a fall through the $0.6545 – $0.6526 support band. However, an AUD/USD move through the $0.6620 – $0.6600 resistance band would give the bulls a run at the 50-day EMA ($0.66356).

Looking at the 14-4H RSI, the 42.92 reading reflects the bearish trend, with selling pressure outweighing buying pressure. The RSI aligns with the EMAs, signaling a fall through the $0.6545 – $0.6526 support band.