AUD/USD Forecast: Dollar Bulls Triggered on Hawkish Fedspeak

• US retail sales figures came in stronger than expected.
• There are renewed expectations that the Fed will keep raising rates.
• Australia’s employment increased by double market expectations in October.

Today’s AUD/USD forecast is slightly bearish. The US dollar stabilized, and Treasury yields remained low as investors tried to predict the direction of Federal Reserve policy in response to stronger-than-expected retail sales figures. Concerns about the economic prospects have grown in response to renewed expectations that the Fed will keep raising rates.

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This week, Fed officials continued to use hawkish language in their speeches to temper recent market enthusiasm that a change in the central bank’s aggressive rate-hiking policy was imminent.

San Francisco Fed President Mary Daly told CNBC that a pause in rate hikes is not currently on the table, while Fed Governor Christopher Waller stated on Wednesday that there is still work to be done on rates.

“Fed speakers were clear that a pause is not imminent,” Ted Nugent, a markets economist at National Australia Bank, wrote in a client note.

Australia’s employment increased by double market expectations in October, while the unemployment rate matched five-decade lows. This indicates that additional interest rate hikes will be necessary to loosen the labor market.

According to data released by the Australian Bureau of Statistics on Thursday, net employment increased by 32,200 from September to October. Many analysts were expecting a gain of only 15,000. The unemployment rate decreased to 3.4% from 3.5%, surpassing expectations of a modest increase.

AUD/USD key events today

Investors will get a better look at the US housing market when the Building Permits report is released later today. They will also pay attention to the initial jobless claims report that will shed light on the US labor market.

AUD/USD technical forecast: Bearish move comes up against support zone

Looking at the 4-hour chart, we see the price trading slightly above 30-SMA and the RSI above 50, showing bulls are still ahead. However, bears came in at the 0.6801 resistance level to test the bullish trend.

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Currently, the price is trading close to a strong support zone comprising the 0.6701 key level and the 30-SMA. If they can gather enough momentum to push below this zone, the price will head for the next support at 0.6551. However, if they fail, bulls will probably return stronger to retest and break above the 0.6801 resistance.

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