AUD/USD Coils Above May Low - Australia Wage and Jobs Report on Tap

AUD/USD Outlook

AUD/USD holds above the monthly low (0.6608) as it snaps the series of lower highs and lows from last week, and data prints coming out of Australia may keep the exchange rate afloat as the Reserve Bank of Australia (RBA) keeps the door open to implement higher interest rates.

AUD/USD Coils Above May Low - Australia Wage/Job Report on Tap

AUD/USD bounces along the 50-Day SMA (0.6684) after breaching the April high (0.6806) earlier this month, but the exchange rate may face increased volatility over the remainder of the week as the economic docket is anticipated to show stronger wage growth along with a further improvement in the labor market.

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FOREX.com Economic Calendar

The update to Australia’s Wage Price Index (WPI) is expected to uptick in the first quarter of 2023, while the economy is projected to add 25K jobs in April following the 53K expansion the month prior.

The developments may push the RBA to pursue a more restrictive policy as minutes from the May meeting emphasizes that ‘information available over the prior month had confirmed that the labour market remained tight and that inflationary pressures were significant,’ and it remains to be seen if Governor Philip Lowe and Co. will implement another 25bp rate hike at the next rate decision on June 6 as ‘further increases in interest rates may still be required.’

Until then, AUD/USD may attempt to retrace the decline from the monthly high (0.6816) should the fresh data prints generate speculation for another RBA rate hike, but signs of a weaker-than-expected labor market may produce headwinds for the Australian Dollar as it encourages the central bank to move back to the sidelines.

With that said, AUD/USD may threaten the opening range for May as it gives back the advance from the start of the week, but the exchange rate may trade within a defined range as long as it holds above the monthly low (0.6608).

Australian Dollar Price Chart – AUD/USD Daily

Chart Prepared by David Song, Strategist; AUD/USD on TradingView

AUD/USD holds above the monthly low (0.6608) as it snaps the series of lower highs and lows from last week, but lack of momentum to push above the 200-Day SMA (0.6721) may keep the exchange rate within a narrow range as it struggles to hold above the 0.6660 (50% Fibonacci retracement) region.
Failure to hold above the monthly low (0.6608) along with a close below the 0.6600 (23.6% Fibonacci retracement) handle may push AUD/USD towards the April low (0.6574), with a move below the March low (0.6565) opening up the 0.6510 (38.2% Fibonacci retracement) to 0.6550 (61.8% Fibonacci retracement) area.
Nevertheless, AUD/USD may attempt to retrace the decline from the monthly high (0.6816) as it appears to be coiling within a narrow range, with a move above the long-term moving average bringing the 0.6780 (38.2% Fibonacci retracement) to 0.6820 (23.6% Fibonacci retracement) region back on the radar.

Additional Resources:

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--- Written by David Song, Strategist

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