• AUD/USD bears seeking break of the daily support structure. 
  • Eyes on the daily H&S pattern, commodities and US stocks. 

AUD/USD ended lower on Friday, losing 0.59% as the US dollar firmed on strong US data during mixed markets on Wall Street. 

AUD, which is a high-beta currency, is closely correlated to the performance of US stocks and commodity prices and had suffered an end of week blow. 

US data is proving to be a thorn in the side of the Aussie bulls and the negative correlation between US stock and the US dollar played its role in the bearish outcome in the pair on Friday. 

The US preliminary May composite index rose strongly to a record high of 68.1. Both manufacturing and services rose to record highs with the 5.4 point surge in services to 70.1 particularly impressive.

''Owing to vaccination progress, service sector activity is bouncing back sharply,'' analysts at ANZ bank explained.

''However, expectations of strong growth are pervasive and equity markets struggled to rally on the data,'' the analysts noted which in trend weighed on the Aussie. 

Meanwhile, the analysts argue that ''the debate in financial markets is now not so much about how quickly Gross Domestic Produce can recover but rather the shape of recoveries.''

Traders are taking the view that the Federal Reserve will stick to the lower for longer mantra that argues any price increases are transitory.

Meanwhile, from a domestic front, AUD has received mixed signals from both the data and commodity side this week.

In the face of the end of the JobKeeper wage subsidy, the Unemployment Rate fell to 5.5% in March and the outcome of the data was positive despite the drop in the Employment number.

The Reserve Bank of Australia will not be on the schedule for a while yet, but there is the case for a slightly less dovish central bank which is a booster for the Aussie

In the interim, traders will be keen to watch for developments in the commodities sector. 

Iron ore has been in recovery mode of late within tight ranges but any further downside will anchor progress in the Aussie, as will risk related to the developments in the Aussie-China trade relationships.

AUD/USD technical analysis

From a technical perspective, the bearish head and shoulders on the daily chart are compelling for the days ahead:

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content

Recommended content

Editors’ Picks

EUR/USD climbs above 1.0600 amid renewed dollar weakness

EUR/USD climbs above 1.0600 amid renewed dollar weakness

EUR/USD has gathered bullish momentum and advanced beyond 1.0600 during the American trading hours on Monday. Following the mixed data releases, the US Dollar Index extended its slide below 104.00 and fueled the pair's rally in the second half of the day.


GBP/USD reverses direction, reclaims 1.2300

GBP/USD reverses direction, reclaims 1.2300

Following a dip below 1.2250 earlier in the day, GBP/USD reversed its course and reclaimed 1.2300. The broad-based selling pressure surrounding the greenback helps the pair push higher in the American session as investors assess the latest data releases.


Gold bears gearing up for a breakout

Gold bears gearing up for a breakout

XAUUSD is slowly gaining bearish traction, with sellers now aligned at lower levels. Gold advanced throughout the first half of the day, but trimmed gains and trades near a daily low of $1,820.63, as the dollar gathered momentum ahead of the US opening. 

Gold News

Everything you need to know about Shiba Inu’s Ryoshi Vision rewards before June 29

Everything you need to know about Shiba Inu’s Ryoshi Vision rewards before June 29

ShibaSwap, the native decentralized exchange of the Shiba Inu coin project, announced the distribution of Ryoshi Vision rewards within the next 48 to72 hours from June 26, 2022.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!