Technical Analysis

AUD/USD decline stalls for now, all eyes on tomorrow’s US jobs report

AUD/USD bounces off the lows despite poor retail sales data earlier


The aussie is a tad higher on the day after recovering from lows near 0.7020, having to balance out a poor retail sales data alongside decent trade balance data and continuous upbeat comments by China to support its economy. But aside from those fundamental factors, there are other reasons also still helping to keep the aussie afloat for now.

Of note, as mentioned yesterday, there are large expiries sitting at the 0.7000 handle rolling off tomorrow so that will continue to spur option-related bids in keeping the pair above the figure level for the time being. The amount is seen to be around A$1.4 billion as of now.

Also, there’s talk of short-covering around current levels though leveraged funds are believed to still be holding on to offers in the pair around 0.7050 for the time being. Hence, downside remains limited by bids associated to the options tomorrow and upside remains capped by flows and fundamentals.

Given the situation, all eyes will now turn to tomorrow’s US jobs report to offer the pair with further clues on which direction it should be breaking towards. Should the US labour market continue to run hot once again, expect further downside pressure to follow in AUD/USD; more so when it loses support as the large expiries roll off at 1400 GMT tomorrow.

As it stands, the head-and-shoulders pattern shown above is still intact so let’s see if things will play out in favour of the technical set up when tomorrow comes.

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