AUD/USD eyes monthly low ahead of Australia jobs report

AUD/USD Outlook

AUD/USD trades to a fresh weekly low (0.6875) following the stronger-than-expected US Retail Sales report, but the update to Australia’s Employment report may curb the recent weakness in the exchange rate as the release is anticipated to show rebound in job growth.

AUD/USD eyes monthly low ahead of Australia jobs report

AUD/USD tests the 50-Day SMA (0.6883) for the second time this month as it gives back the advance from the monthly low (0.6856), and the exchange rate may no longer track the positive slope in the moving average if it fails to defend the opening range for February.

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However, a rebound in Australia Employment may spur a bullish reaction in AUD/USD as the Reserve Bank of Australia (RBA) insists that ‘further increases in interest rates will be needed over the months ahead,’ and the central bank may continue to strike hawkish forward guidance at the next interest rate decision on March 7 amid the ongoing rise in the Consumer Price Index (CPI).

In turn, speculation for a more restrictive policy in Australia may curb the recent decline in AUD/USD, but another unexpected decline in employment may drag on the exchange rate as it puts pressure on the RBA to conclude its hiking-cycle.

With that said, developments coming out of Australia may influence the near-term outlook for AUD/USD, but the exchange rate may no longer respond to the positive slope in the 50-Day SMA (0.6883) if it fails to defend the opening range for February.

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Australian Dollar Price Chart – AUD/USD Daily

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

• AUD/USD tests the 50-Day SMA (0.6883) for the second time this month as it gives back the advance from the monthly low (0.6856), and the exchange rate may no longer respond to the positive slope in the moving average as it trades below the indicator for the first time since November.
• Failure to defend the opening for February may lead to a break/close below the 0.6820 (23.6% Fibonacci retracement) to 0.6870 (38.2% Fibonacci retracement) region, with a move below the 200-Day SMA (0.6805) opening up the January low (0.6688).
• Nevertheless, AUD/USD may attempt to retrace the decline from the weekly high (0.7030) if it defends the monthly low (0.6856), with a break/close above the 0.7090 (50% Fibonacci retracement) to 0.7140 (23.6% Fibonacci expansion) area raising the scope for a run at the June 2022 high (0.7283).

--- Written by David Song, Strategist