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AUD/USD Turns Bearish as Australia’s Job Market Softens and USD Strengthens
Economic
Summary:
The Australian Dollar weakened against the US Dollar as March labor data missed expectations and the unemployment rate ticked up.
Sell
CLOSEDAUDUSD
End Time
0.63500
Entry Price
0.62200
TP
0.64140
SL
0.64134 +0.00143 +0.22%
640
Points
Loss
0.62200
TP
0.64141
CLOSING
0.63500
Entry Price
0.64140
SL
The Australian Dollar (AUD) came under pressure on Thursday, halting a six-day rally against the US Dollar (USD) as soft domestic labor market figures and a stronger greenback shifted the momentum back in favor of the bears. At the heart of the move was the latest Australian employment report, which failed to meet expectations and sowed renewed doubt over the health of the labor market. The data, combined with hawkish US economic signals, catalyzed a reversal in AUD/USD dynamics, pushing the pair off recent highs and toward short-term technical support.
The AUD/USD pair dipped below the critical 0.6390 resistance level after the Australian Bureau of Statistics reported a net employment gain of 32.2K in March—well below the consensus estimate of 40K. The unemployment rate rose to 4.1%, a modest uptick from the prior reading but still under the forecasted 4.2%. While the data was not disastrous, it marked a clear cooling in what had been a surprisingly resilient job market.
Markets responded swiftly. The Aussie, which had shown notable strength amid recent risk-on sentiment and China’s economic rebound, lost traction against a broadly stronger US Dollar. The disappointing employment figures, when paired with dovish tones from the Reserve Bank of Australia’s (RBA) April meeting minutes, amplified rate cut expectations for the months ahead. Traders are now pricing in a 25-basis point cut as early as May, with nearly 120 basis points of easing projected over the next year.
While the Aussie faltered, the US Dollar surged, buoyed by robust March retail sales, which rose 1.4% month-on-month—topping both the prior month’s 0.2% gain and the consensus forecast of 1.3%. The data underscored the resilience of the US consumer, even in the face of elevated borrowing costs and lingering inflationary pressures. This strength was reflected in the US Dollar Index (DXY), which climbed toward 99.60, its highest level in weeks.
In addition, inflation metrics offered a mixed but generally supportive narrative for the greenback. The March Consumer Price Index (CPI) rose 2.4% year-over-year, cooling from February’s 2.8% and undershooting the expected 2.6%. Core CPI, which excludes volatile food and energy components, printed at 2.8%, also softer than expected. While this may give doves some ammunition, the Fed remains cautious. Atlanta Fed President Raphael Bostic reiterated that the central bank still faces a “long road” in returning inflation to its 2% target, downplaying hopes for imminent rate cuts.
The tone was echoed by a recent consumer sentiment survey from the New York Fed, which revealed growing household concerns over inflation, job security, and credit access. Yet, despite this unease, consumer spending remains robust—a dynamic that continues to confound market expectations for rapid policy easing.
Providing a modicum of support to the AUD was the latest batch of Chinese macroeconomic data. China’s Q1 GDP expanded by 5.4% year-over-year, beating expectations of 5.1%, while industrial production and retail sales surged 7.7% and 5.9% respectively, both well above consensus. As Australia’s largest trading partner and a key buyer of its iron ore and other commodities, a resurgent China typically bodes well for the Aussie.
However, the impact was dulled by renewed geopolitical friction. The Chinese Foreign Ministry issued a strong statement in response to the US’s continued tariff threats, warning that Beijing would “simply ignore” further provocations. This escalation casts a shadow over future trade flows and limits the upside for risk-sensitive currencies like the AUD.
Back home, the RBA’s April meeting minutes did little to lift sentiment. Policymakers struck a cautious tone, suggesting uncertainty over the appropriate timing of the next policy move. The board acknowledged that May could be a suitable time for adjustment, but fell short of committing to action. The dovish undertone reinforces the market’s expectation of an imminent rate cut, especially in light of the softening labor market and slowing domestic momentum—evident in Westpac’s Leading Index, which dropped from 0.9% to 0.6% in March.
This policy ambiguity, juxtaposed with a clearer Fed trajectory—either a prolonged pause or modest tightening—has skewed rate differentials against the Aussie. Until clarity emerges from the RBA, the AUD is likely to remain under pressure.
Technical Analysis
From a technical perspective, the AUD/USD pair has turned bearish in the short term. After failing to break above the key horizontal resistance at 0.6390, the pair is now forming a local pullback, indicating a possible continuation of the downtrend. A negative divergence is forming on the Relative Strength Index (RSI), which, despite being in oversold territory, is flashing warning signs for further downside.
Currently, the price is trading above the 50-day Exponential Moving Average (EMA), but bearish pressure may intensify if the pair fails to hold current levels. A short position could be considered with a take-profit target at 0.6220 and a stop-loss at 0.6414, reflecting the likelihood of a deeper correction if market sentiment continues to favor the greenback.
TRADE RECOMMENDATION
SELL AUDUSD
ENTRY PRICE: 0.6350
STOP LOSS: 0.6414
TAKE PROFIT: 0.6220
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