Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6375.
- Add a stop-loss at 0.6550.
- Timeline: 1-2 days.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6550.
- Add a stop-loss at 0.6375.
The AUD/USD exchange rate moved sideways as market participants reacted to the latest US nonfarm payrolls (NFP) data and as investors reacted to the latest tariff news. It was trading at 0.6468 on Monday, a few points above last week’s low of 0.6420.
Concerns about the US Remains
The AUD/USD pair has been in the spotlight in the past few months as market participants focus on its role as a safe-haven asset. One reason for concern is that the US has implemented unilateral tariffs against all countries.
Consequently, the effective tariff rate on August 7 will jump to 16.6%, much higher than less than below 5% earlier this year. Analysts believe that these tariffs will ultimately lead to higher inflation in the US and slow the economy.
These effects are becoming clearer. A report released last week showed that the personal consumption expenditure (PCE) rose to 2.6% in June, higher than what analysts were expecting. Another report revealed that the headline consumer price index rose to 2.9% during the month.
Meanwhile, data by the Bureau of Labor Statistics showed that the US non-farm payrolls (NFP) data rose by 73,000 last month, a big miss than what analysts were expecting.
Wage growth slowed and the unemployment rate jumped to 4.2% in August, a sign that the situation is getting worse.
More concerns about the role of the US dollar as a safe haven have rose after Donald Trump fired the head of the Bureau of Labor Statistics (BLS) following the weak report. This firing may lead to a lack of trust of US government data.
At the same time, Trump continues to pressure Jerome Powell to either cut interest rates or resign. Trump will now nominate the replacement of Adriana Kugler who resigned as a member of the Fed Governors.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair jumped from a low of 0.5935 in April to the current 0.6468. It bottomed at 0.6420 last week and then rose rose after the weak nonfarm payrolls data.
The pair remains below the lower side of the ascending channel and the 50-day moving average. Therefore, the pair will likely continue falling as sellers target the key support at 0.6372, its lowest point on June 23rd. A move above the resistance at 0.6550 will point to more gains.
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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.