Home Forex News AUD/USD Turns Bearish Near 1-Month Highs On Dollar Strength

AUD/USD Turns Bearish Near 1-Month Highs On Dollar Strength

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  • 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.

Daily Chart

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

Weekly Chart

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

AUD/USD Outlook

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.

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