AUD/USD Outlook: Bears might aim to challenge YTD low, around 0.6570-65 region

The AUD/USD pair struggles to capitalize on the previous day's modest bounce from over a two-week low and meets with a fresh supply during the Asian session on Thursday. The Australian Dollar (AUD) weakened slightly in reaction to the disappointing release of domestic employment details, indicating that the red-hot labour market might be cooling. The Australian Bureau of Statistics reported that the number of employed people unexpectedly fell by 4.3K in April, and the unemployment rate rose to 3.7% from 3.5%. Additional details revealed a loss of 27.1K full-time jobs that could help eases price pressures and allow the Reserve Bank of Australia (RBA) to refrain from hiking in June.

The US Dollar (USD), on the other hand, stands tall near its highest level since March 24, touched on Wednesday and turned out to be another factor exerting some pressure on the AUD/USD pair. The recent hawkish remarks by several Federal Reserve (Fed) officials pushed back against market expectations for interest rate cuts later this year. This, along with the latest optimism that the US debt ceiling will be raised, remains supportive of elevated US Treasury bond yields and continues to underpin the buck. US President Joe Biden and top congressional Republican Kevin McCarthy underscored their determination to strike a deal soon to raise the government's $31.4 trillion debt ceiling.

This helps calm fears of an unprecedented American debt default and boosts investors' confidence. This led to the overnight strong rally in the US equities and, the spillover effect is evident from a generally positive tone around Asian stock markets. The risk-on impulse, meanwhile, keeps a lid on any further gains for the safe-haven Greenback and limits the downside for the risk-sensitive Aussie, at least for the time being. However, any meaningful recovery for the AUD/USD pair seems elusive amid worries over slowing global growth in China, which tends to have a greater impact on the AUD. This, in turn, suggests that the path of least resistance for spot prices is to the downside.

Market participants now look forward to the US economic docket, featuring the release of the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and the Philly Fed Manufacturing Index later during the early North American session. Traders will further take cues from speeches by influential FOMC members, which, along with the US bond yields, will drive the USD demand and provide some impetus to the AUD/USD pair. Apart from this, developments surrounding the US debt-limit negotiations and the broader risk sentiment should produce short-term trading opportunities around the major.

Technical Outlook

From a technical perspective, last week's failure near the 100-day Simple Moving Average (SMA) and the subsequent downfall favours bearish traders. Adding to this, the AUD/USD pair now has found acceptance below the 50-day SMA, which, along with negative oscillators on the daily chart, support prospects for a further near-term depreciating move. Some follow-through selling below the 0.6630-0.6625 region will reaffirm the bearish outlook and drag spot prices below the 0.6600 mark, towards the YTD low, around the 0.6570-0.6565 region touched in March. The downward trajectory could get extended towards challenging the 0.6500 psychological mark.

Conversely, any meaningful recovery now seems to confront stiff resistance near the 0.6680-0.6685 region (50 DMA), above which the AUD/USD pair could test the 200-day SMA, around the 0.6715 zone. Any further move up might continue to attract fresh sellers and remain capped near the 100-day SMA, currently pegged just ahead of the 0.6800 mark, which should act as a pivotal point. A sustained strength beyond will shift the bias in favour of bullish traders and accelerate the momentum towards the next relevant hurdle near the 0.6840 region. 
The upward trajectory could eventually push the major to the 0.6900 round figure for the first time since February 2023 en route to the 0.6955-0.6960 intermediate resistance and the 0.7000 psychological mark.