Australian Dollar edges up against US Dollar with NFP data in focus

The Australian Dollar (AUD) trades slightly higher to near 0.7040 against the US Dollar (USD) during the European trading session on Friday. The Aussie pair edges up as the US Dollar trades cautiously ahead of the United States (US) Nonfarm Payrolls (NFP) data for July, which will be published at 12:30 GMT.

At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower to near 99.92.

US labor data seen steady as TD Securities flags asymmetric Dollar risks

According to TD Securities, the upcoming US payrolls release is expected to show that "Payrolls [are] likely to edge up to 70k," pointing to a modest but still steady pace of job creation. The bank cautions that "an upside surprise could add fuel to fire for hikes," particularly with the "UE rate likely to stay at 4.2%," underscoring a labor market that remains tight enough to keep the Fed attentive to inflation risks. On the rates side, TD Securities argues that "soft payrolls may ease hike fears, but inflation keeps markets nervous and the reaction asymmetric," suggesting that any downside surprise in employment would have a more limited impact on the Dollar than a stronger-than-expected report.

The impact of the US NFP data will be significant on the Federal Reserve’s (Fed) monetary policy outlook as policymakers have stopped providing forward guidance on interest rates.

According to the CME FedWatch tool, there is a 54.7% chance that the Fed will raise interest rates in the September policy meeting.

Meanwhile, the Australian Dollar is expected to trade broadly sideways, with investors shifting their focus to the Reserve Bank of Australia’s (RBA) monetary policy decision on Tuesday.

RBA seen on hold as softer inflation eases pressure to tighten

Analysts at Standard Chartered reiterate that they “continue to expect the Reserve Bank of Australia (RBA) to keep the cash rate unchanged at 4.35% at its 11 August meeting,” pointing to a benign inflation backdrop. They note that “Q2 trimmed mean inflation held steady at 0.8% q/q – as we had expected – and below the RBA’s prior forecast (0.9%),” a development which, “together with the recent retracement in oil prices, should take the pressure off the RBA to tighten policy further in the near term.”

AUD/USD Technical Analysis

AUD/USD trades at around 0.7037, holding a constructive bullish tone as it remains above the 20-day Exponential Moving Average (EMA) at 0.7004 and within an upward-sloping parallel channel. Price is currently closer to the channel’s upper boundary at 0.7071 than to the floor at 0.6943, suggesting buyers retain control, while the Relative Strength Index (RSI) near 56 stays in neutral-to-positive territory, hinting at steady upside momentum rather than overbought conditions.

On the downside, initial support is seen at the 20-day EMA at 0.7004, ahead of stronger structural demand at the lower edge of the rising channel near 0.6943. On the topside, the channel’s upper boundary at 0.7071 forms immediate resistance; a sustained break above this barrier would open the way for a continuation of the prevailing uptrend, while failure to clear it could trigger consolidation back toward the moving average support.

(The technical analysis of this story was written with the help of an AI tool. Know more.)