The Australian dollar has already been trading deep within the 0.75 handle, but a series of positive developments sent the pair higher, and it is now challenging resistance.
Has AUD/USD turned a corner or is it just a necessary correction on the way down? The same factors that brought it down are now assisting the A$. Here are 3 reasons:
- Aussie labor: The Australian jobs report did not deviate too much from expectations: the economy gained 15.6K jobs, well within expectations of +15K in February. For January, the fall in jobs was revised from 12.2K to 14.6K. The unemployment rate dropped from 6.4% to 6.3%, but this came on top of a slide in the participation rate from 64.7% to 64.6%. This mostly “as expected” report is a positive development in the so-far bearish environment. This could delay a potential RBA cut in April. The central bank refrained from a second consecutive cut in March after surprising in January.
- China: Reports coming from Australia’s No. 1 trade partner say that the central bank, the PBOC, is set to tell banks to lower their reserves – lend more money. This is a positive move.
- US dollar correction: After a day that saw dollar bulls raging, the greenback is now somewhat on the back foot, with a necessary correction underway: EUR/USD is 100 pips above the lows, GBP/USD is back above 1.50, etc. This correction is helping the Aussie.
More:
- AUDUSD: H&S + Elliott Wave Count point lower;
- AUD/USD: Bear Flag Break – Goldman Sachs
Resistance is found at 0.7680, where the pair attempted to recover yesterday. This is followed by 0.7715 and 0.7780.
The previous low of 0.7625 now serves as minor support. The latest 6 year low of 0.7560, is the ultimate support line before 0.75.
Here is how it looks on the chart:
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