- The AUD/USD forecast shows a resilient labor market in Australia.
- Traders are almost fully pricing a 25-bps RBA rate cut in May.
- Powell maintained his cautious tone, stating there was no hurry to lower borrowing costs.
The AUD/USD forecast shows a resilient labor market in Australia. However, market participants are still pricing an RBA rate cut at the next meeting. Meanwhile, the dollar rebounded after data in the previous session revealed solid consumer spending in March.
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Australia released its employment figures on Thursday, showing stronger job growth and weaker unemployment. Employment came in at 32,200, missing forecasts of a 39,800 increase. However, it was a big improvement from the previous reading. Meanwhile, the unemployment rate came below estimates of 4.1%, showing solid demand.
However, the strong figures did not lower expectations for a Reserve Bank of Australia rate cut in May. At this meeting, market participants had moved to price a massive rate cut. However, those bets have eased, with traders expecting a quarter-point rate cut.
Meanwhile, the dollar recovered slightly from its slump after upbeat sales data. Retail sales increased by 1.4%, beating forecasts of a 1.3% increase. Moreover, it was a massive jump from the previous 0.2% increase. The data eased fears of a looming recession and lowered Fed rate cut expectations.
Additionally, Powell maintained his cautious tone, stating there was no hurry to lower borrowing costs. Policymakers need more time to assess the impact of Trump’s policy moves. However, the outlook for the dollar remains clouded as the trade war with China rages on.
AUD/USD key events today
AUD/USD technical forecast: Bulls weaken before reaching the 0.6401 resistance
On the technical side, the AUD/USD price is pulling back towards the 30-SMA after a steep rally. However, the bullish bias remains strong with the price above the SMA and the RSI above 50. The trend recently reversed when the RSI made a bullish divergence. As a result, the price broke above the 0.6200 resistance and made a steep rally.
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However, the slope became shallower as the price rose higher. Bulls were approaching the 0.6401 resistance level. However, before this, the price might retest the 30-SMA. A break above the 0.6401 resistance will strengthen the bullish bias. However, if the level holds firm, the price might break below the SMA, indicating a bearish shift in sentiment.
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