AUD/USD finds support near 0.7320, stages a modest recovery in the early NA trading

• Unemployment figures from Australia beat expectations on Thursday.
• US Dollar Index retraces a small portion of its daily gains after surging to a fresh 12-month high above 95.

After spiking up to 0.7440 during the Asian session, the AUD/USD pair reversed its course and erased more than 100 pips amid broad-based USD strength to touch a fresh daily low at 0.7320. However, with the US Dollar Index losing some steam in the last hour, the pair was able to make a small recovery and was last seen trading at 0.7340, where it was still down 0.8% on the day.

The data from Australia showed that the full-time employment increased by 41.2K in June following May’s disappointing 19.9K contraction. Further details of the report revealed that the overall employment grew by 50.9K to beat the market expectation of 17K and the unemployment rate remained unchanged at 5.4% as the participation rate increased to 65.7% from 65.5%.

Nevertheless, the pair failed to take advantage of the upbeat data as the greenback preserved its strength against its major rivals. The US Dollar Index, which closed the day near 94.80 after failing to stay above the 95 mark on Thursday, advanced to its best level since July 2017 at 95.45 and forced the pair to turn negative on the day.

The weekly jobless claims in the United States fell to its lowest level in nearly 50 years at 207K and the Philly Fed Manufacturing Index improved to 25.7 from 19.9 to beat the experts’ estimate of 22. The positive readings couldn’t help the greenback continue its March north and the US Dollar Index erased a part of its daily rise. At the moment, the index is up 0.45% at 95.28. Nonetheless, the DXY’s recent retreat seems to be a technical correction rather than a sell-off caused by fundamental developments and the pair is likely to remain under pressure in the short-term.

Technical outlook

The RSI indicator on the daily chart suggests that the pair has more room on the downside before becoming technically oversold. Supports could be seen at 0.7310/00 (Jul. 2 low/psychological level), 0.7240 (Dec. 19, 2016, low) and 0.7195/0.7200 (Dec. 22, 2016, low/psychological level). On the upside, resistances are located at 0.7390 (20-DMA), 0.7465 (50-DMA), and 0.7500 (psychological level).