AUD/USD Forecast: Recovery could continue but NFP has the last word

Matías Salord FXStreet

AUD/USD Current Price: 0.6367

US employment data is crucial for determining the near-term direction of the Dollar.
The Australian Dollar benefits from a moderate improvement in risk sentiment and lower US Treasury yields.
The AUD/USD pair is extending its recovery, testing levels above the important 0.6350 zone.

The AUD/USD has extended its recovery from monthly lows and climbed above 0.6350. This move was driven by a moderate improvement in risk sentiment, a decline in US Treasury yields, and the ongoing correction of the US Dollar. However, the direction of the pair will depend on upcoming US data.

Trade data released on Thursday showed that Australian exports rose by 4% in August after a 2% decline in July, while imports remained unchanged. Although there are positive signs, they are not yet enough to overshadow concerns about China's outlook.

On Friday, the Reserve Bank of Australia (RBA) will release the Financial Stability Review, which assesses the current condition of the financial system and potential risks to financial stability. No surprises are expected from this report.

More employment data was released in the US on Thursday, with Initial Jobless Claims rising to 207,000, below the market consensus of 210,000. Jobless claims continue to reflect challenges in the labor market. However, the key report will be released on Friday, with the official Nonfarm Payrolls report. The expectation is for an increase of 170,000. Jobs data will be critical for determining the direction of the Dollar and expectations regarding Federal

Reserve monetary policy. However, the trigger for an imminent rate hike would be a rebound in inflation.

AUD/USD short-term technical outlook

The AUD/USD is up for the second consecutive day, gaining almost a hundred pips from the monthly lows it reached earlier at 0.6284. Despite the rebound, the overall trend remains bearish, and the technical indicators on the daily chart provide mixed signals, with the Momentum below 100 and the price still far from the 20-day Simple Moving Average (SMA).

On the 4-hour chart, the pair shows positive momentum with the potential to extend gains while above 0.6340. However, a consolidation under 0.6340 would weaken the Australian Dollar. The pair is currently approaching the resistance area at 0.6375, and above that, the next target stands at 0.6400. The MACD, Relative Strength Index (RSI), and Momentum indicators all point to the upside, supporting the bullish bias ahead of the Asian session.

Support levels: 0.6340 0.6315 0.6280

Resistance levels: 0.6400 0.6430 0.6465

View Live Chart for the AUD/USD

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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