Aussie Jobs Data Impresses and Keeps AUD/USD Bullish

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Aussie Jobs Data Impresses and Keeps AUD/USD Bullish

Double Bottom: The AUD/USD started the year falling to 0.8035 but found support there twice, forming a double bottom. Last week after a mixed set of US jobs data, the USD stalled, and AUD/USD broke above the double bottom introducing a bullish correction scenario. This week, the pair looked poised to invalidate this bullish signal falling below 0.81.

AUD/USD 4H Chart 1/15
audusd 4h chart 1/15
(click to enlarge)

The market did eventually find support and brought the pair back above 0.81. Then after the US retail sales release today, where we saw negative retail sales data stall the greenback’s recent gains, the AUD/USD made edged higher. However, it stalled ahead of Australian employment data.

AUS Employment Change (Dec.) 37.4K
Forecast: 5.3K
Previous: 45.0K (revised up from 42.7K)
aus employment change
(click to enlarge; source: forexfactory.com)
AUS Unemployment Rate (Dec.) 6.1%
Forecast: 6.3%
Previous: 6.2% (revised down from 6.3%)
aus unemployment rate
(click to enlarge; source: forexfactory.com)

December’s employment change number gives Australia 3 strong months of job gains. This has stalled the rise in unemployment rate since mid-2012, from below 5% to above 6%. Overall, today’s report is not only strong in it of itself, but shows that the job market may be stabilizing.

Take a Step Back: Basically, during the 1/14-1/15 sessions, we saw evidence that the optimism for US and the USD as well as the gloom for Australia and the AUD may be overdone. Translation: AUD/USD might be oversold.

AUD/USD Outlook:

Now, going back to the headline – the part that says “Keeps AUD/USD Bullish” – I should clarify that it means in the short-term. The medium-term trend is still bearish, but as noted before, AUD/USD did form a double bottom so far this year, and is showing ability to rally from this bottom. The 4H RSI held above 40 after tagging 70, which is a sign that the pair is building bullish momentum.

If price does extend above the current high near 0.8250, the next key level might be around the 0.83 handle, which is in the middle of a recent support/resistance area (seen in intra-day charts ie. 4H, 1H). Around 0.83, price would also be challenged by a falling trendline seen in the daily chart.

AUD/USD Daily Chart 1/15
audusd daily chart 1/15
(click to enlarge)

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.