- Dollar Strength
- Australia Weak Employment Data
- RBA Forward Dovish Guidance
AUD/USD is struggling for direction near one-month highs. The U.S dollar has continued to strengthen against the Australian Dollar despite weak economic data the past week raising serious concerns about the health of the world’s largest economy.
U.S Dollar Strength Impact
The U.S Dollar index, which measures the strength of the U.S dollar relative to other major currencies, is closing in on the $100 barrier. A strengthening greenback comes at the backdrop of Non-Farm Payroll, indicating that more than 20.5 million people lost their jobs in April.
A strengthened dollar has continued to pile pressure on the AUD/USD pair, which has since dropped to highs of $0.6560 after turning bullish in recent trading sessions. The pair has since dropped to the $0.6520 level and at risk of dropping further amidst weakness on the Australian Dollar.
Immediate support on any pullback is at the $0.6500 level from where the AUD/USD pair remains supported for further upside action. However, a breach of the $0.6500 support level could trigger a further selloff.
Time : 11-05-2020
Pivot : 0.6543
Technical View : Long Above 0.6563
Target : 0.6583 next 3 targets are 0.6583, 0.6595 and 0.6624
Comments : Weak Bullish
Last Price : 0.6510
Time : 11-05-2020
Pivot : 0.6497
Technical View : Demand Zone
Target : 0.6481 and 0.6626
Technical View : Supply Zone
Target : 0.6577 and 0.6432
Looking at the week ahead, the employment report could pile more pressure on the AUD/USD, which is under immense pressure. Estimates indicate that the economy might as well have lost more than 575,000 jobs in April, marking the biggest decline since 1978. The jobless rate is poised to rise to 8.3% from 5.2% in March.
Weak employment data all but affirms the negative impact that the COVID-19 pandemic continues to have on the Australian economy. The country’s central bank is under immense pressure to support the economy as the unemployment rate looks set to remain at an elevated level for long.
In addition, the Australian Dollar is likely to face lots of headwinds in the weeks ahead on the Reserve Bank of Australia, maintaining dovish forward guidance. With the Dollar expected to continue strengthening as a safe haven amidst the economic crisis around the world, the AUD/USD remains vulnerable to dropping back to 12-year lows.