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 AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6375.
The AUD/USD exchange rate remained under pressure after the latest Australian jobs report raised the possibility that the Reserve Bank of Australia (RBA) will cut interest rates in the upcoming meeting. It retreated to a low of 0.6440, down sharply from the year-to-date high of 0.6705.
Australian Jobs Report and US Inflation Data Ahead
The AUD/USD exchange rate wavered after the Australian Bureau of Statistics (ABS) published the latest jobs numbers. This report showed that the country’s inflation rose to a four-year high in September, a sign that more Australians went out to look for work.
The numbers showed that the country’s net employment rose by 14,000 in September, confirming the view that the country’s employment growth has slowed sharply this year.
Therefore, most analysts now expect that the central bank will slash interest rates by 0.25% in the next meeting after it left it unchanged in September. A rate cut would help to stimulate the economy by making it cheaper for companies to borrow.
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The AUD/USD pair also reacted to the strong Chinese GDP and manufacturing and industrial production numbers. This growth will likely continue if the US and China reach an agreement and end tensions in the next two weeks.
Treasury Secretary Scott Bessent will meet with China's premier this week to talk on trade and prepare for the upcoming meeting between Trump and Xi Jinping at the APEC Summit in South Korea.
The next key catalyst for the AUD/USD exchange rate will be the upcoming US Consumer Price Index (CPI), which will come out on Friday. This will be the only official report by the Bureau of Labor Statistics (BLS) released this month because of the ongoing government shutdown.
Economists expect the data to show that the headline Consumer Price Index rose to 3.1% in September as the core CPI remained unchanged at 3.1%. A high inflation rate will complicate the Fed’s outlook now that it has made the case for rate cuts.
AUD/USD Technical Analysis
The daily timeframe chart shows that the AUD/USD pair has pulled back in the past few weeks, moving from a high of 0.6705 on September 17 to a low of 0.6440 on Friday.
The pair has remained below the important support level at 0.6526, the lowest swing on September 25. It has moved below the 50-day and 100-day Exponential Moving Averages (EMA).
The pair is also forming a bearish flag pattern, a common continuation sign. Therefore, the most likely scenario is where it continues falling as traders target the next key support level at 0.6375, its lowest point on June 22.
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