Job report in focus as bear market pressure AUD / USD

Australian Dollar, AUD / USD, AUD / JPY, AU Job Report, IG Client Sense – Weekly Outlook

  • The Australian dollar continued to feel the pressure last week
  • Will a local job report revive any spirit for the Aussie?
  • Technical and emotion analysis seemss does not promise well

The Australian dollar widened losses against the US dollar last week. Despite a more hawkish Reserve Bank of Australia earlier this month, the prevailing risk aversion in the financial markets weighs on the sentiment-related currency. In the coming week, traders should be aware of the Australian jobs report.

On Wednesday, the country is expected to add 30,000 jobs in April, as unemployment falls to 3.9% from 4.0%. It would be the first time registered to see the figure below 4%. This could boost more lofty RBA policy expectations, which could potentially boost the Australian currency. With that in mind, what does technical landscaping look like for the Aussie?

AUD / USD – Bearish

Unfortunately, the technical position of the Australian dollar has deteriorated, in line with weakness since April. Last week, the AUD / USD confirmed an eruption below the critical 0.6968 – 0.7000 support zone. It has revealed the 0.67777 – 0.6832 range below, which are the lowest levels last seen in June 2020. If the latter is cleared, it could pave the way for a trajectory towards the 2020 lows.

However, keep a close eye on the RSI. Positive divergence appears to be prevalent, indicating that downward momentum is declining. This can sometimes precede a turn higher. With that in mind, there may be room for the currency to recover. The real test of a bounce would likely be the declining trend line from March on the chart below.

Getting there involves pushing back over the 0.6968 – 0.7000 zone, which can establish itself as new resistance. Above this zone, the declining trend line may re-establish the dominant focus to downward. Extended losses would reveal 100% and 123.6% Fibonacci expansion levels of 0.6635 and 0.6486, respectively.

Australian dollar forecast: Job report in focus as bear market pressure AUD / USD

Chart created in TradingView

Australian Dollar IG Client Mood Analysis – bearish

Takes a look at IG Client Sentiment (IGCS)76% of retailers were net long AUD / USD towards the end of last week. At times, IGCS can behave like a conflicting indicator. As the majority of investors are biased, this could mean problems for the Aussie. This is because the upside exposure increased by 7.34% and 19.98% compared to yesterday and last week, respectively. With that in mind, these signals offer a stronger bearish contrarian trading bias for AUD / USD.

Australian dollar forecast: Job report in focus as bear market pressure AUD / USD

* IGCS data used from 12 Mayth report

— Written by Daniel Dubrovsky, Strateg to Technewscity

To contact Daniel, use the comment box below or @ddubrovskyFX on Twitter