AUD/USD Current Price: 0.6623
- Financial turmoil in the US and Europe deepens, boosting the US Dollar.
- Australian employment report due on Thursday, likely to be offset by recent developments.
- AUD/USD vulnerable to breaking below 0.6560.
The AUD/USD dropped sharply on Wednesday as markets tumbled across the globe. The banking-sector crisis reached Europe, deepening concerns and adding uncertainty to the current outlook. This time, risk-off boosted the demand of the US Dollar and weighed on AUD/USD. The pair managed to trim losses, rising back above 0.6600 late during the American session as Wall Street indexes moved off lows.
The banking crisis now has its European chapter with Credit Suisse. Concerns about its situation triggered a sharp decline in its shares and also in the banking sector. Risk aversion across financial markets boosted government bonds further, and also the US Dollar. If the deterioration in market sentiment deepens, the Aussie could suffer more; on the contrary, if contagion is contained, an improvement could trigger a rally.
On Thursday, Australia will release the employment report. Estimates indicate the economy added 48,500 jobs during February after losing 11,500 in January. Consensus point to an increase in the unemployment rate from 3.6% to 3.7%. Job figures could become old news a few minutes after the release as market participants focus on the global banking sector and its potential impact on sentiment, economic activity and monetary policy.
Australian Employment Preview: Job creation to add pressure on the RBA
Prior to the employment report, the Melbourne Institute will release Consumer Inflation Expectations for the next 12 months. New Zealand will report Q4 GDP. US economic data in the docket includes Initial Jobless Claims, Philly Fed and Housing Starts.
AUD/USD short-term technical outlook
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Ahead of the Asian session, the AUD/USD is recovering after bottoming at 0.6588. The pair seems vulnerable and risks are tilted to the downside. The daily chart shows two key barriers to the upside: 0.6700 and 0.6765 (100- and 200-day Simple Moving Averages). A consolidation above 0.6765 would change the current negative perspective. On the downside, a support band between 0.6560 and 0.6580 is critical as a break below would likely trigger an acceleration toward 0.6530.
The 4-hour chart shows price moving with a downward bias, with a test of the monthly lows likely if AUD/USD loses 0.6600. Momentum has fallen below 100 and the RSI is moving south, still away from the 30 zone. Above 0.6660, the Aussie would alleviate the bearish pressure.
Support levels: 0.6580 0.6530 0.6500
Resistance levels: 0.6635 0.6695 0.6720
View Live Chart for the AUD/USD
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