The AUDUSD moved lower with the USD move up after the stronger than expected US jobs data and the stronger ISM data. The US jobs report took the price away from its 100 and 200 hour moving averages up at 0.7069 and 0.7081. In the Asian session, the price moved below that level – and stayed below it – until the jobs report was released. That surprise sent the pair sharply to the downside.
The initial decline took the price back below the 38.2% retracement of the 2023 trading range where the price consolidated and paused below a swing area between 0.6982 and 0.69976 (see red numbered circles on the chart above).
The ISM data surprise sent the price further to the downside, and below the 50% midpoint of the 2023 range at 0.69393. The low price reached 0.69294, but quickly rebounded back above the 50% retracement level. The price returned back to the yellow area/swing area between 0.69825 and 0.6997. There is some stall there. The current price trades at 0.69714.
What next?
Traders had their shot below the 50% retracement level. They could not sustain momentum. Having said that, the 38.2% retracement swing area is keeping a lid on the pairs rally. Watch for sellers ahead of the 0.7000 natural level with some disappointment on a break back above that key level.
US stocks has erased ALL of their declines. Yields in the US remain higher with the two-year up 18 basis points and the 10 year up 13.6 basis points. However if you look at the week, the 10 year yield is only up 2.5 basis points. The 2 year is up 6.7 basis points. The back up in yields is controlled for now.
The US economy seems stronger than expected and that should keep the Fed in play for potentially longer as they continue to fight inflation . The surge in rates is having some impact in housing. Big companies are shaving extra staff that they overdid it during the go-go days of 2021 and into 2022.
However, inflation remains a problem in Australia too.
So watch the technical levels for close clues. Move above 0.7000 and there should be some more retracing higher. Stay below and traders will be eyeing the 50% below for more bearish clues.