AUDUSD Tests Top of Triangle Ahead of US NFP; Should We Brace for a Breakout?

AUDUSD is virtually unchanged from its opening price today despite disappointing Australian trade data earlier. As of this writing, the currency pair is up by 3.9 pips from where it opened at 0.6918. Technicals suggest that buyers are pushing the currency pair to test a key resistance level. Can AUDUSD break out with the NFP report scheduled today?

Earlier, the Australian Bureau of Statistics reported that the trade balance for May was at 8.03 billion AUD. This fell short of the 9 billion AUD forecast and was supposed to be bearish for the currency pair.

However, market participants could be squaring their long-dollar positions with the much-anticipated US NFP report due later today. Because it is a long weekend in the US with July 4th celebrations scheduled on Friday, the jobs data will be released at 1:30 pm GMT today. The forecast is for the economy to have added 3.037 million jobs in June and the unemployment rate is anticipated at 12.4%. 

Better-than-expected numbers could strengthen the USD and push AUDUSD lower. Meanwhile, worse-than-expected data could weaken the USD and help AUDUSD trade higher.

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AUDUSD Outlook

On the 4-hour time frame, it can be seen that the currency pair has been making lower highs and higher lows. Consequently, a symmetrical triangle has formed. When you enroll in our free forex trading course, you will learn that this is widely considered as a neutral indicator. That is, until the currency pair breaks out.

As of this writing, AUDUSD is testing resistance at the top of the triangle around 0.6930. A strong close above yesterday’s high at 0.6942 would invalidate the resistance level and could mean that buyers are dominating the market. AUDUSD could soon then rally to its June 23 highs at 0.6974.

On the other hand, if resistance holds, we may soon see the currency pair fall to the bottom of the triangle at 0.6856. A strong close below this price could indicate that there is more downside potential ahead for AUDUSD. It may then continue to trade lower to 0.6775 where it bottomed on June 15.

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