Weak jobs data from Australia has sparked another strong selloff for AUDUSD, which has been testing a key support zone in the past few days. Strong data from the US has exacerbated the selloff, leading to more downside for the forex pair.
On the daily chart, it can be seen that AUDUSD already broke below the .8600 major psychological support and may be headed to the next one at .8000. Falling commodity prices have been weighing on this pair, along with the downturn in risk sentiment.
AUDUSD Long-Term Outlook
However, should the breakdown prove to be a fakeout, AUDUSD might still bounce up to the near-term resistance at the .8700 major psychological mark. Event risks for this setup this week include the US NFP release, which could show a slightly weaker pace of hiring gains.
Improved sentiment towards the US economy could continue to keep AUDUSD gains in check, as the FOMC has recently shifted to a more hawkish monetary policy stance. The RBA, on the other hand, is maintaining its pledge to keep rates low for much longer and insisting that the Australian dollar is still overvalued.
Event risks for this AUDUSD setup include the RBA minutes in the Asian trading session but this didn’t seem to hurt the pair’s slide so far. Later on, the non-farm payrolls release might prove to be a catalyst for larger moves before the week comes to a close. A slightly weaker pace of hiring gains is eyed but it could still confirm the FOMC’s bias to start tightening monetary policy next year.
Should the October NFP release turn out to be a huge disappointment though, AUDUSD could bounce back to the broken support zones for a quick retest. The path of least resistance for this pair is still to the downside, as the Australian economy is on a weaker footing compared to the US.
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