The Australian dollar ended lower on Friday after hitting its highest level since April 22.
The catalyst that spurred the move was stronger-than-expected U.S. jobs data, which offset dim hopes that the Federal Reserve might slow its expected pace of interest rate hikes.
On Friday, AUD/USD settled at 0.7208, down 0.0057 or -0.79%. The Invesco CurrencyShares Australian Dollar Trust (FXA) ETF closed at $71.40, down $0.56 or -0.78%.
Aussie drops as strong US jobs data revives hopes of aggressive tightening
Australian bulls took profits on Friday, after a US report showed non-farm payroll employment jumped 390,000 in May after jumping an upwardly revised 436,000 in April. Economists expected employment to rise by about 325,000 jobs from the 428,000 job addition initially reported the previous month.
Meanwhile, the Labor Department said the unemployment rate remained unchanged at 3.6%. The unemployment rate was expected to drop to 3.5%. The government report also showed that the average hourly wage rose by 0.3%, below forecasts but matching the April figure.
Better-than-expected employment growth indicates the economy is still strong, while falling average hourly wages suggest growth is starting to moderate amid a rebounding labor force.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, the momentum could be about to drop. A trade to 0.7201 will confirm the closing price reversal top. It won’t change the main downtrend, but it will shift the momentum down.
A trade at 0.7283 will negate Friday’s closing price reversal high and signal a resumption of the uptrend. A move to 0.6829 will change the main downtrend.
The minor trend is also up. A trade through .7141 will change the minor downtrend. This will confirm the change in dynamics.
The main range is 0.7661 to 0.6829. Its retracement zone at .7245 to .7343 is resistance. This zone halted the rally on Friday at 0.7283.
The intermediate range is 0.7458 to 0.6829. AUD/USD closed inside its retracement zone at 0.7143 to 0.7218.
The short-term range is 0.6829 to 0.7283. If the minor trend turns bearish, expect the selloff to continue in its retracement zone at 0.7056 to 0.7002.
Daily Swing Chart Technical Forecast
Traders reaction at 0.7212 should determine the direction of AUD/USD on Monday.
A sustained move below .7212 will indicate the presence of sellers. The exit of .7201 will confirm the closing price reversal top. If this move creates enough downside momentum, expect selling to eventually extend into the support clusters formed by a 50% level at 0.7143 and a minor bottom at 0.7141.
Exiting .7141 will change the minor downtrend. This could trigger an acceleration towards 0.7056.
A sustained move above .7212 will signal the presence of buyers. Breaking above 0.7218 will indicate that buying is strengthening with 0.7245 as the next target.
A trade at 0.7245 could lead to a retest of Friday’s high at 0.7283, followed by the main Fibonacci level at 0.7343.