This pair is showing a textbook trend retracement play ahead of Australia’s jobs release.
Will resistance still hold or will we see a breakout?
Before moving on, ICYMI, yesterday’s watchlist looked at an area of interest on GBP/USD ahead of the U.S. retail sales release. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. April headline retail sales rose 0.9% vs. 1.0% forecast
U.S. core retail sales up by 0.6% vs. 0.4% estimate in April
U.S. March headline retail sales upgraded to 1.4%, core figure revised higher to 2.1%
U.S. industrial production rose 1.1% vs. projected 0.4% uptick
Fed official Evans: Transition to 0.25% hikes expected by July or Sept
New Zealand GDT dairy prices fell by 2.9%, following earlier 8.5% drop
Australia’s wage price index up by 0.7% vs. 0.8% forecast in Q1
Australian MI leading index fell by 0.2% in April
U.K. headline CPI rose from 7.0% to 9.0% y/y vs. 9.1% forecast
U.K. core CPI climbed from 5.7% to 6.2% as expected in April
U.K. Finance Minister Sunak: Inflation jump driven by energy price cap rise
Canadian inflation figures at 12:30 pm GMT
U.S. EIA crude oil inventories at 2:30 pm GMT
New Zealand PPI input and output prices at 10:45 pm GMT
Australian employment change at 1:30 am GMT
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What to Watch: AUD/USD
Check out this classic trend pullback on the hourly chart of AUD/USD!
The pair has been cruising inside a descending channel that’s been holding since mid-April, and it looks like resistance is being tested again.
Will sellers jump back in soon?
Technical indicators seem to be pointing to a continuation of the selloff, as the 100 SMA is below the 200 SMA while Stochastic is on its way south.
These indicate that bearish pressure is in play, possibly taking AUD/USD back down to the swing low at .6830 or the channel bottom closer to the .6800 handle.
Dollar bulls have enough reason to keep the currency supported, especially since the U.S. retail sales report turned out mostly stronger than expected.
However, it might all boil down to the Australian jobs report lined up in the next Asian trading session. Analysts are counting on a 30K gain in hiring, following the earlier 17.9K increase, which might be enough to bring the jobless rate down from 4.0% to 3.9%.
A stronger than expected figure might boost hopes for a bigger RBA hike, which might even spur a reversal for AUD/USD. Better keep your eyes peeled!