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Focus Shifts to US Non-Farm Payrolls


The AUD/USD pair will likely move below the lower side of the channel pattern ahead of the upcoming non-farm payroll data.

  • Sell the AUD/USD pair and set a take-profit at 0.6560.
  • Add a stop-loss at 0.6700.
  • Timeline: 1-2 days.
  • Set a buy-stop at 0.6750 and a take-profit at 0.6850.
  • Add a stop-loss at 0.6685.

The Australian dollar remained under pressure after more signs of a Fed and Reserve Bank of Australia (RBA) divergence emerged. After rising to a high of 0.6791 on Monday, the AUD/USD pair pulled back to a low of 0.6675.


One of the biggest news this week was the decision by the Reserve Bank of Australia (RBA). In a statement, the RBA decided to leave interest rates unchanged for the first time since May last year. It argued that the rate pause was necessary since it will give it a chance to assess the impact of its rate hikes.

In addition, the bank said that pausing rate hikes will help to support the economy, which has been slowing in the past few months. The economic slowdown is mostly because of the elevated inflation and interest rates. On Wednesday, data showed that the services PMI dropped to 48.6 in March from the previous 50.7.

The AUD/USD also reacted to a hawkish statement by Loretta Mester, the head of Cleveland’s Federal Reserve. In her statement to Bloomberg, she said that she remained supportive of more rate hikes because of the elevated inflation in the country.

Still, it is too early to predict what the Fed will do in the next meeting since it is too far. The bank will meet next in May. Before that, traders will focus on key economic data since the bank’s officials have said that they will be data-dependent.

Data published this week so far has shown that the economic recovery is slowing. On Monday, data revealed that manufacturing PMI remained below 50 in March. Additional data published on Tuesday revealed that the number of vacancies in the US dropped to 9 million in February.

And on Wednesday, data by ADP showed that the private sector created just 180k in March, sharply lower than what it created in the previous month. The ISM non-manufacturing PMI also dropped in March. Therefore, if the US publishes more weak numbers, the Fed will likely pivot in a bid to engineer a soft landing.

The AUD/USD pair has been in a slow upward trend in the past few weeks. Along the way, the pair has formed an ascending channel pattern shown in orange. On Tuesday, the pair managed to move to the lower side of this pattern.

It is now hovering at the 50-period moving average while the MACD and the signal line have formed a bearish crossover pattern. Therefore, the pair will likely move below the lower side of the channel pattern ahead of the upcoming non-farm payroll data. If this happens, the AUD to USD pair will likely retest March’s low of 0.6560.

AUD/USD signal chart

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