Bearish View
- Set a sell-stop at 0.7060 (38.2% retracement level).
- Add a take-profit at 0.6760 (50% retracement).
- Set a stop-loss at 0.7426 (23.6% retracement).
- Timeline: 2-3 days.
Bullish View
- Set a buy-stop at 0.7100 and a take-profit at 0.7425 (23.6% retracement).
- Add a stop-loss at 0.6900.
The AUD/USD price declined to the lowest level since November last year even after Australia published strong jobs numbers. The pair fell to 0.7215, which was about 10% below the highest level this year.
Australia Jobs Numbers
The Australian economy added just 2,200 jobs in July as the country continued reacting on the current wave of the pandemic. This increase was driven by a 6,400 increase in part-time workers while full-time employees declined by about 4,200. As a result, the country has more than 13 million in the labour force.
As a result, the country’s unemployment rate declined to a 12-year low of 4.6%, which is impressive. This decline was better than the median estimate of 5.0%. The participation rate declined from 66.2% to 66.0% in July.
The AUD/USD declined mostly because analysts expect that gains in the labour market will be affected by the current Covid crisis. In New South Wales, the government reported a record 681 new cases. This means that the current lockdown will likely remain for longer, which will have a negative impact on the economy.
The pair also declined after the relatively hawkish minutes by the Federal Reserve. Minutes of the previous meeting showed that most of the bank’s officials believe that it should start thinking about tapering its asset purchases. The bank is currently buying $120 billion worth of treasury bonds and mortgage-backed securities (MBS). Its total balance sheet has risen to almost $8 trillion.
On Thursday, the AUD/USD will be affected by the American jobless claims numbers. Economists expect the data to show that the country’s initial jobless claims declined from 375k in the previous week to 363k. At the same time, they expect that the continuing claims dropped from 2.866 million to 2.80 million.
AUD/USD Technical Forecast
The daily chart shows that the AUD/USD pair has been in a deep downward trend. The pair has also formed a head and shoulders pattern, which is a sign of bearish reversal. It has also declined below the 23.6% Fibonacci retracement level.
The MACD has moved below the neutral level while the price is below the 25-day and 50-day weighted moving averages (WMA).
Therefore, the pair will likely maintain the bearish trend with the next key target being at the 50% retracement at 0.6760.
