- AUD/USD bulls are moving towards a key resistance area.
- Bears eye a correction into the W-formation´s neckline.
AUD/USD is better bid as we approach lunchtime in the New York session on Thursday. The pair has traveled from a low of 0.6484 and is testing 0.6581 so far.
The US Dollar index fell to 103.52, the lowest for some time as fresh data and comments from some Fed officials raised bets the central bank will pause in June. Firstly, a slump in productivity was revised lower, while the ISM PMI showed the manufacturing sector contracted for a 7th month. Initial jobless claims and the ADP report beat forecasts but the data indicates a less tight labour market.
Additionally, the Federal Reserve´s Governor Philip Jefferson and Philadelphia Fed President Patrick Harker suggested the central bank would skip a rate hike in the next meeting. This all comes ahead of the US Nonfarm Payrolls showdown on Friday. A strong outcome will likely reignite a US Dollar rally while a disappointment will likely boost AUD/USD.
´´US payrolls likely slowed modestly in May, advancing at a still strong 200k+ pace for a second consecutive month. We also look for the UE rate to stay unchanged at a historical low of 3.4%, and for wage growth to print 0.3% MoM (4.4% YoY),´´ analysts at TD Securities said.
AUD/USD technical analysis
Technically, AUD/USD has been pressing up against trendline resistance that it is now breaking at the time of writing. This puts the pair on the way to a test of a 50% mean reversion area. The break of this trendline resistance has opened risk to prior lows near 0.6605 and a 61.8% Fibonacci level. This, in turn, will leave behind a W-formation, a reversion pattern. The neckline will be eyed in the 0.6660s for a restest as support as follows:
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