AUD to USD Forecast: Sub-$0.65 Hinged on the US Jobs Report

Highlights

• It is a busy Friday session for the AUD/USD, with the RBA Monetary Policy Statement in focus early in the session.
• However, the US Jobs Report will be the focal point, with the Report capable of shifting bets on the Fed ending its monetary policy tightening cycle.
• The near-term technical indicators remained bearish, signaling a return to sub-$0.65.

On Thursday, the AUD/USD gained 0.18% to end the day at $0.65502. Australian trade data and service sector PMI numbers from China provided much-needed support.

The RBA Monetary Policy Statement will draw interest this morning. On Tuesday, the RBA surprised the markets by holding the cash rate unchanged at 4.10%. The Statement should guide investors on what to expect in the coming months. Weakening macroeconomic conditions suggest the RBA may need to leave the brakes on.

The US Session

It is a busy US session, with the US Jobs Report to draw interest. A pickup in wage growth and a steady US unemployment rate would refuel bets on a September Fed rate hike. Economists forecast average hourly earnings to slow from 4.4% to 4.2 and the unemployment rate to hold steady at 3.6%.

The US labor market forms part of the Fed’s dual mandate. The FOMC Committee forecasts the longer-run normal rate of unemployment to be 4.1%. The US unemployment rate fell from 3.7% to 3.6% in June. Tighter labor market conditions would lead to higher wage growth levels and a demand-driven inflation pickup. Higher borrowing costs would curb hiring and wage growth.

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 ($0.66958) and 200-day ($0.67425) 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 38.26 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 (previously the support 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 ($0.66484) and 200-day ($0.67022) 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 (previously the support band) would give the bulls a run at the 50-day EMA ($0.66484).

Looking at the 14-4H RSI, the 37.27 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.