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  • Total nonfarm employment increased by 223K in May.
  • The US Dollar Index spiked up to 2-day high at 94.30.
  • AUD/USD tumbled to a daily low at 0.7515 before making a quick recovery.

The AUD/USD pair extended its daily losses with the initial reaction to the positive employment numbers from the United States. After losing more than 30 pips in a matter of minutes, the pair touched a session low at 0.7515 and retraced a part of its losses. As of writing, the pair was trading near 0.7525, losing 0.55% on the day.

Following the disappointing 159K (revised down from 164K) nonfarm payroll growth in April, the labor market gained strength in May with the NFP jumping up to 223K to beat the market expectation of 188K. Furthermore, the unemployment rate dropped to 3.8%. More importantly, wage inflation, measured by the average hourly earnings, rose 0.3% on a monthly basis (vs. 0.2% exp.) and 2.7% annually, confirming another rate hike in June.

The US Dollar Index rallied to a 2-day high at 94.30 on the back of the upbeat data and was last seen at 94.20, where it was up 0.25% on the day. Later in the NA session, Markit and ISM will be publishing their respective manufacturing PMI numbers. As the Fed’s Beige Book pointed out earlier this week, the manufacturing sector remains healthy and a higher-than-expected acceleration in the activity could help the DXY and the week on a high note above the 94 mark.

Technical levels to consider  

The pair could face the initial support at 0.7500 (May 29 low/psychological level) before edging lower toward 0.7445 (May 16 low) and 0.7410 (May 9 low). On the upside, resistances align at  0.7595/0.7600 (May 31 high/50-DMA/psychological level), 0.7690 (100-DMA)  and 0.7730 (200-DMA).