AUD/USD Forex Signal: Extremely Bullish Above 0.7031

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The outlook for the pair is currently biased to the upside.

Bullish view

  • Set a buy-stop at 0.7030 and a take-profit at 0.7100.
  • Add a stop-loss at 0.6950.
  • Deadline: 2 days.

Bearish view

  • Set a sell stop at 0.6950 and a take profit at 0.6900.
  • Add a stop-loss at 0.7050.

AUD/USD edged higher during the Australian session as investors reacted to the strengthening US Dollar and the latest Australian employment data. The pair hit a high of 0.700, which was close to this week’s high of 0.7031.

Australian labor market tightening

The Australian labor market is tightening at a slower pace than expected. According to the latest jobs report, the country’s unemployment rate fell from 4.0% in April to 3.9% in April. This is the lowest level ever recorded. The same trend occurred in the UK, where the unemployment rate fell to its lowest level in almost 50 years.

Meanwhile, Australia’s economy added just 4,000 jobs in April after adding more than 17.9k in March. This increase was significantly lower than the median estimate of 30,000. The participation rate rose from 66.4% to 66.3%. These figures show that the country’s economy is doing well. However, the biggest challenge is that real incomes are falling. Data released on Wednesday showed real incomes rose just 0.7% in March as inflation jumped.

The price action for the AUD/USD pair occurred as investors pondered the hawkish statement from the Federal Reserve Chairman. Speaking at a WSJ event, Jerome Powell said the bank would continue to raise interest rates in a bid to bring soaring inflation under control.

The next key driver for the pair will be the Philadelphia Fed Manufacturing Index and the initial jobless claims numbers. The impact of these numbers on the pair will be much lower.

Perhaps investors are still preparing for the upcoming Australian elections which will take place over the weekend. Analysts expect the outcome of these results to be close even if the work remains in the lead. Still, Scott Morrison managed to cover his gap recently.

AUD/USD Forecast

The AUD/USD pair formed a strong resistance level at 0.7031, which was the May 9th high. The pair moved slightly below the 50-day moving average. Additionally, the Relative Strength Index (RSI) and the Money Flow Index (MFI) diverged. The RSI is pointing up and the MFI is pointing down.

The outlook for the pair is currently biased to the upside. A move above this week’s high of 0.7031 will signal that the bulls have prevailed and open the possibility for it to head back up to 0.7100. On the other hand, a move below 0.6950 will open the possibility for the pair to move below 0.6850.

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