AUD/USD Price Forecast: Bears have the upper hand while below 100-day SMA amid stronger USD

The AUD/USD pair gains some positive traction in reaction to the upbeat Australian labor market report on Thursday and snaps a three-day losing streak to over a five-week low touched the previous day. The official data showed that Australia’s Jobless Rate came in at 4.1% in September against market expectations of 4.2%. Furthermore, the previous month's reading was revised down to 4.1%. Adding to this, the economy added 64.1K jobs last month as compared to 42.6K in August. The strong job numbers put another nail in the coffin for Reserve Bank of Australia (RBA) rate cut expectations this year and provide a goodish lift to the Australian Dollar (AUD).

Meanwhile, China’s minister of housing and urban-rural development, Ni Hong said that the country will expand its “whitelist” of real estate projects and speed up bank lending for these unfinished developments to 4 trillion yuan by the end of the year. This comes on top of a series of high-level government policy announcements aimed at bolstering the economy and turns out to be another factor that benefits the China-proxy Aussie. The AUD/USD pair, however, struggles to capitalize on its intraday move up beyond the 0.6700 mark amid a bullish US Dollar (USD), bolstered by expectations for a less aggressive policy easing by the Federal Reserve (Fed). 

Investors now seem convinced that the US central bank will proceed with modest interest rate cuts and lower borrowing costs by 25 basis points (bps) at its November monetary policy meeting. This keeps the yield on the benchmark 10-year US government bond above the 4% mark and lifts the USD Index (DXY), which tracks the Greenback against a basket of currencies, to its highest level since early August. Apart from this, persistent geopolitical risks stemming from the ongoing conflicts in the Middle East benefit the safe-haven USD and contribute to capping gains for the AUD/USD pair. Traders now look to the US macro releases for a fresh impetus.

Thursday's US economic docket features monthly Retail Sales, Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Industrial Production figures. The data will be assessed for cues about the Fed's timeline for potential rate cuts and drive the USD demand, producing short-term trading opportunities around the AUD/USD pair. The market focus will then shift to the Chinese macro data dump, including the third quarter GDP report, due for release during the Asian session on Friday, which might further influence the Aussie. 

Technical Outlook

From a technical perspective, the overnight breakdown below the 100-day Simple Moving Average (SMA) could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding in negative territory and are still away from being in the oversold zone. This, in turn, supports prospects for an extension of the AUD/USD pair's recent pullback from the 0.6940-0.6945 region, or the highest level since February 2023 touched last month. 

Hence, some follow-through weakness below the 0.6660-0.6655 area, or over a one-month low set on Wednesday, towards testing the 200-day SMA support near the 0.6625-0.6620 zone, looks like a distinct possibility. The latter coincides with the September monthly swing low, which if broken should pave the way for a further depreciation. The AUD/USD pair might then weaken below the 0.6600 mark and test the next relevant support near the 0.6565 region.

On the flip side, the intraday swing high, around the 0.6710 area, now seems to act as an immediate hurdle. Any subsequent move up is likely to attract fresh sellers and remain capped near the 0.6750-0.6760 region. That said, a sustained strength beyond the latter might trigger a short-covering rally and lift the AUD/USD pair to the 0.6800 mark. The momentum could extend further towards the 0.6820-0.6825 region en route to the 0.6900 round figure.

AUD/USD daily chart