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Under Pressure Despite Upbeat Australian Jobs

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  • The US dollar is retesting recent multi-decade highs.
  • Australia’s employment grew in August.
  • The RBA will likely continue raising rates as the economy is showing resilience.

Today’s AUD/USD forecast is bearish as the US dollar strengthens further after surprising US inflation data. The unexpected spike in US inflation and the anticipation of rate increases in reaction has driven the dollar higher to retest recent multi-decade highs. This has seen AUD/USD pushing lower despite positive data from Australia.

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Australian employment increased in August following a surprising decline the previous month, while the unemployment rate nudged up just a touch from a 48-year low, highlighting the labor market’s resilience in the face of higher interest rates.

According to data released by the Australian Bureau of Statistics on Thursday, net employment increased by 33,500 in August, broadly matching market expectations and reversing a 41,000 decline in July.

With such resilience, it seems likely that the Reserve Bank of Australia (RBA) will continue to raise interest rates; the only remaining question is whether it will do so by another half-point in October or by reducing the pace to quarter-point movements.

RBA Governor Philip Lowe opened the door to delaying the pace of raises. As a result, the market is leaning toward 25 basis points next month.

AUD/USD key events today

Investors will pay attention to news releases from the US as there won’t be any significant releases from Australia. The US will release retail sales data and the initial jobless claims report.

AUD/USD technical forecast: Bears aiming for 0.6705 breakout

AUD/USD forecast

Looking at the 4-hour chart, we see the price trading below the 30-SMA and the RSI below 50. The bears are in control, and they have momentum on their side. Buyers had taken over for some time when the price was trading above the 30-SMA. However, their reign was short-lived as they could not break above the e0.6901 resistance level.

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Sellers took over the market with a lot of momentum, pushing the price back below the 30-SMA. The downtrend has paused at 0.6705, a solid support level. The price is currently pulling back and might retest resistance at 0.6801 before falling and possibly breaking below 0.6705. The new downtrend will be confirmed if and when the price makes a lower low below 0.6705.

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