AUDUSD fell to an intraday low of 0.6836 after the employment reports from Australia for May failed to meet expectations. However, the currency pair is currently trading at 0.6863, only 16 pips below its opening price.
According to the Australian Bureau of Statistics, the labor market shed 227,700 jobs in May. This was more than twice than the expected decline which was only at 105,000. In addition to this, the employment change reading for April was downwardly-revised to -607,400 from -594,300.
Consequently, these job losses translated to an uptick in the unemployment rate from 6.4% in April to 7.1% in May. This reading also topped the 6.9% consensus for the month.
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AUDUSD Outlook
As shown in the chart below, AUDUSD recouped most of its losses following disappointing report. What can we then expect from the currency pair?On the daily time frame, it can be seen that AUDUSD is testing a confluence of support around 0.6865. For one, this price coincides to a previous trendline (when you connect the highs of January 31, 2019 and December 31, 2019). When you enroll in our free forex trading course, you will learn that broken falling trendlines could also turn into support. Secondly, this price also coincides with the area between the 23.6% and 38.2% Fib levels (when you draw the Fibonacci retracement tool from the low of May 4 to the high of June 10). There are already a couple of reversal candlesticks which could hint that there may be buyers in the market. If this assumption turns out to be true, we could soon see AUDUSD retest its 10-month highs at 0.7062.
On the other hand, a strong bearish close below the low of June 15 at 0.6775 would invalidate support at the previous trendline and Fib levels. It could mean that there are still sellers left in the market and AUDUSD could soon fall to 0.6652 where it may test support at the 200 SMA.More content
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