- The dollar strengthened due to upbeat employment data and reduced rate-cut bets.
- Analysts indicated that the jobs report means the Fed is unlikely to cut rates as soon as March.
- The Fed projected an approximately 75 basis points cut in rates for 2024.
A surge in the dollar, fueled by an upbeat employment report, sets a bearish tone in the AUD/USD weekly forecast. The employment report showed the US economy remains hot and might need high rates for longer.
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Ups and downs of AUD/USD
The Aussie closed the week lower as the dollar strengthened due to upbeat employment data and reduced rate-cut bets. Notably, at the start of the week, the dollar gained as investors became less confident about a March Fed rate cut. Later, the nonfarm payroll report gave it another boost.
Analysts indicated that the jobs report means the Fed is unlikely to cut rates as soon as March. Moreover, they observed that the futures market would eventually align more closely with the Fed’s projection of approximately a 75 basis points cut in rates for 2024.
Next week’s key events for AUD/USD
The calendar for next week will feature inflation data from the US. The US will release the consumer and producer price index reports. These reports will majorly impact the pair as they will determine when the Fed will start cutting rates.
A higher-than-expected reading on consumer inflation could lower bets for a rate cut as early as March. On the other hand, easing inflation would increase bets for a March cut. Consequently, it would weaken the dollar and support a rally in the pound.
AUD/USD weekly technical forecast: Bears test channel support
On the technical side, AUD/USD is trading in a bullish channel, respecting its support and resistance. At the same time, the price is respecting the 22-SMA support and bouncing higher every time it touches the line. Meanwhile, the RSI has traded above 50 since the price crossed above the 22-SMA, supporting bullish momentum.
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The bullish move recently paused at the 0.6850 resistance level, leading to a retracement. Bears managed to push the price down to a solid support zone comprising the 22-SMA and the 0.6674 support level. Moreover, the price has reached the channel support.
Therefore, bulls will likely return next week to continue the uptrend from this support zone. On the other hand, if the price breaks below this zone, it will signal a shift in sentiment to bearish and a possible reversal.
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