Aussie gained a surprise strong momentum during the Asian session on Wednesday against all the major currencies, after the release of the employment report for the second day in a row. The unemployment rate fell to the lowest level has been since February 2013, at 5.5% in May versus market projections for 5.7%. The labour participation rate is at the highest in ten months, at 64.9 while employment changes outperformed to 42.0K versus expectations of 10.0K.
The day before the AUD/USD ignored the weak domestic data and bolstered by China’s reports. The Westpac consumer confidence fell 1.8% in June from a slip of 1.1% before. Australia biggest trading partner, China, reported that industrial production expanded 6.5% in May against the previous year, as in April, and above market forecasts of 6.4%. The solid gains pushed the AUD/USD to meet our suggested target at 0.7610 with more than 50 pips profit (see previous analysis here “Aussie is Running Upwards After RBA; Where is the roof?”)
AUD/USD – Technical Outlook
The Australian dollar performed very well over the yesterday’s trading session but it gave back some of its gains post FOMC meeting. On a weekly basis, the AUD/USD pair is completing the second bullish month in a row, added more than 2% at its value, whilst it is developing within an ascending trend line since January 2016.
On a daily timeframe, the commodity currency pair rose almost 1% since Wednesday, as suggested, and posted a three-month high at 0.7635 resistance handle. The price surpassed the three simple moving averages (50, 100 and 200) and is approaching again the latter level. Also, the aggressive run pushed the price higher and climbed above the 50-weekly SMA. The next level to watch is the 0.7680 strong barrier if we see a successful attempt above 0.7635.
Looking on the short-term timeframe again, the technical indicators are endorsing the thought for further rising trend. The RSI indicator is approaching the overbought zone with strong momentum. Additionally, the MACD oscillator is strengthening in the positive area and jumped above both, trigger and zero lines.
Analysis by JFD Research