The AUD/USD pair experienced a slight decline as the recent bullish trend lost its momentum, influenced by a relatively robust US dollar. The value decreased to 0.6686, slightly under this month’s peak of 0.6765. The AUD/USD exchange rate experienced a decline on Monday as market participants assessed the implications of the US non-farm payrolls data. This report presents a mixed picture, as the economy has added 55,000 jobs while the unemployment rate has decreased to 4.0%. It is evident that the labor market remains weak, as companies are mitigating the impact of tariffs through workforce reductions. Several well-known companies, such as Amazon, Google, and Dell, reported significant layoffs last year. The manufacturing sector has experienced significant impact due to the surge in raw material costs.
Consequently, the sector has experienced a significant reduction in employment, resulting in thousands of job losses over the past few months. The reduction of jobs within the government sector has played a role in the easing of the labor market. The AUD/USD pair is poised to respond to the forthcoming US Consumer Price Index report. The data is anticipated to indicate that inflation in the US has stayed above the 2% target. A lower rate than anticipated would increase the likelihood that the Federal Reserve may reduce interest rates beyond current expectations. Recent minutes indicated that a majority of officials were in favor of implementing additional cuts later this year, contingent upon a continued decline in inflation.
A recent report from Australia indicated that the nation’s inflation continues to exceed the 2% target. The headline CPI registered at 3.4%, a decrease from the prior figure of 3.8%. On Friday, Andrew Hauser, the Deputy RBA governor, remarked that inflation remains excessively elevated. Consequently, it is probable that the bank will maintain interest rates at their current levels or consider an increase later this year. The daily chart indicates that the AUD/USD exchange rate has experienced a rebound over the past few months. The asset has experienced a recovery from a low of 0.6420 in November, reaching a peak of 0.6765.
The pair subsequently retraced, reaching a low of 0.666 as the rally experienced a decline in momentum. The asset has fallen beneath the critical support level at 0.6700, which represents the upper boundary of the cup-and-handle formation. The pair continues to trade above the 50-day moving average. The MACD indicator continues to stay above the zero line, whereas the Relative Strength Index has shown a downward trend. An ascending channel has also been established. Consequently, the pair is expected to rebound as buyers aim for the upper boundary of the channel at 0.6764. A decline beneath the ascending channel will indicate further downside potential.