• There was an unexpected jump in Australia’s employment in June.

• Investors raised the likelihood of an RBA rate hike in August from 12% to 20%.

• Investors are fully pricing in a rate cut at the Fed’s September meeting.

The AUD/USD forecast remains bearish. However, the pair managed to recover slightly after a mixed Australian jobs report. This week, the currency’s downtrend persisted despite rising expectations of a Fed rate cut.

Data on Thursday showed that Australia’s economy added 50,200 jobs in June, bigger than the forecast of 20,000. However, the unemployment rate also increased from 4.0% to 4.1%, giving a mixed picture of the labor market.

Still, demand in Australia’s labor market remains robust. Consequently, after the report, investors raised the likelihood of an RBA rate hike in August from 12% to 20%. At the same time, markets expect the first rate cut well into next year. The next major report will be the Consumer Price Index later this month. Inflation might increase, which could push up bets for a rate hike.

Meanwhile, the opposite is happening in the US, where policymakers are gaining confidence that inflation will reach the 2% target. At the same time, data on Tuesday revealed that the economy remains on solid ground, with retail sales beating forecasts. Therefore, the Fed might achieve a soft landing with inflation reaching the 2% target without a recession.

Furthermore, investors are fully pricing in a rate cut at the Fed’s September meeting. The policy outlooks between Australia and the US are diverging. The Fed might start cutting soon while there is still a risk of a rate hike by the RBA.

AUD/USD key events today

• US unemployment claims

AUD/USD technical forecast: Bears struggle to find footing after reversal

On the technical side, the AUD/USD price is in a downtrend, trading below the 30-SMA resistance. At the same time, the RSI sits slightly below 50, supporting bearish momentum. The trend recently reversed when bulls failed to reach the 0.6800 key level.

Bears took control when the price broke below the 30-SMA and the bullish trendline. The sharp decline then paused to retest the trendline before continuing lower. However, bears have still not found their footing below the SMA. The price must now make lower lows and highs to confirm a bearish trend. Therefore, it might soon retest the 0.6700 key support level.

https://www.forexcrunch.com/blog/2024/07/18/aud-usd-forecast-aussie-rises-marginally-on-mixed-jobs-data/