Backdrop: The AUD/USD has been drifting back down in February after a bullish correction at the end of January that brought the pair up to the 0.7875 area. In the 1H chart we can see a descending triangle with 0.7750 support, which broke earlier this week.
AUS Jobs Report: Then after stalling above 0.77 briefly, the AUD/USD fell further following a poor jobs report that showed employment change of -12.2K in January, which was worse than economists’ forecasts around 4.7K. Unemployment rate also rose in January to 6.4% from 6.1% – quite a big jump.
US Data: The AUD/USD slide further to 0.7643. Then if pulled back a bit in the European session. During the US session, we saw worse than expected retail sales and jobless claims numbers, which choked off USD-gains across the board. The AUD/USD rose sharply to about 0.7775.
Key Resistance: The moment of truth is near for the AUD/USD. If we just look at the most recent fundamental factors, we should lean towards the bearish outlook. That is to say, we should expect resistance around 0.7780, where price will be challenged by a falling trendline from the 0.7876 high. Also note that the 4H RSI is approaching overbought levels, and price is testing the cluster of 200-, 100-, and 50-period SMAs.
A break above 0.78 however could invalidate the bearish continuation outlook. It would expose the 0.7876 high, and essentially suggest that the AUD/USD has more bullish correction in the short-term.
Price Bottom Scenario: Now, if price does extend above the 0.7880 area, we would have a price bottom. This would suggest a bullish outlook at least in the short-term towards the 0.80-0.8025 area. This area contains the 200-period SMA and a previous support/resistance area.
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