Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6375.
- Add a stop-loss at 0.6600.
- Timeline: 1-2 days.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6400.
The AUD/USD exchange rate pulled back from the year-to-date high of 0.6623 on July 24 to the current 0.6460. It retreated as market participants continued to react to the recent US jobs numbers and the upcoming tariffs.
A report released on Friday showed that Donald Trump’s tariffs were negatively impacting the economy. The data showed that the unemployment rate rose to 4.2% as the economy created just 73,000 jobs in July.
Worse, revisions showed that the US averaged 35,000 jobs in the last three months, the worst since the pandemic era. This trend may continue as the US prepares to ratchet its tariffs against many countries on Thursday.
These numbers mean that the Federal Reserve will likely start cutting interest rates in the September meeting. Odds of that cut have jumped sharply on Polymarket, a popular prediction market.
The AUD/USD exchange rate reacted to the latest Australian services PMI and housing spending data. A report by S&P Global showed that the services PMI rose to 53.8 in July, up from 51.8 in June.
Another report showed that Australia’s household spending continued rising in June, a positive sign for the economy.
There will be no major macro data from the United States and Australia this weel. The next crucial one will come out next week when the US publishes the latest consumer inflation report. A lower-than-expected inflation report will boost the odds of rate cuts in September.
AUD/USD technical analysis
The daily chart shows that the AUD/USD pair has pulled back in the past few weeks, moving from a high of 0.6623 to the current 0.6465. It has moved below the lower side of the ascending channel and the 50-day moving average, a sign that bears are in control.
More downside will be confirmed if the pair drops below last week’s low of 0.6420. A move below that level will confirm the bearish breakdown and point to more downside, potentially to the key support at 0.6375, its lowest level on June 23rd.
The alternative scenario is where the AUD/USD pair resumes the uptrend and moves back to the ascending channel.
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Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.