- The AUD/USD outlook is optimistic amid hopes of talks between China and the US.
- The dollar was subdued after downbeat US data this week.
- Economists expect slower US job growth of 130,000 in April.
The AUD/USD outlook is optimistic as the Aussie strengthens on hopes of tariff talks between China and the US. At the same time, the currency got support from a weaker dollar after downbeat US data. Meanwhile, market participants are looking forward to the US nonfarm payrolls for more clues on Fed rate cuts.
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Reports on Thursday and Friday revealed that the US was ready to initiate talks with China on tariffs. Meanwhile, China has received and is evaluating an offer from the US to start talks. This is a big step towards the end of a trade war that has hurt the global economy. Moreover, it has rekindled hopes for a brighter outlook for both economies. As a result, the risk-sensitive Aussie rose.
Meanwhile, the dollar was subdued after downbeat US data this week. On Thursday, unemployment claims rose more than expected, raising fears of a deteriorating labor market. Meanwhile, business activity was stronger than expected. However, it contracted further from the previous month.
Market participants are now looking forward to the US monthly report. Economists expect slower job growth of 130,000 in April. A smaller-than-expected number will signal bigger cracks in the labor market, pressuring the Fed to cut interest rates.
AUD/USD key events today
- US average hourly earnings m/m
- US nonfarm employment change
- US unemployment rate
AUD/USD technical outlook: Bulls take the lead in range-bound move
On the technical side, the AUD/USD price is trading in a tight range between the 0.6351 support and the 0.6450 resistance levels. The range came after a sharp rally that kept the price far above the 30-SMA. However, it now just chops through this line, drifting to the side of the chart.
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Within the range, the price is currently above the SMA, and the RSI is above 50, showing bulls are in the lead. Therefore, the price might retest the range resistance. However, the RSI has made a bearish divergence, indicating weaker bullish momentum.
Therefore, bulls would have to regain momentum before breaking out of the range and continuing the previous trend. If they fail, the price will likely bounce lower to retest the range support level. A reversal would allow AUD/USD to reach the 0.6200 support level.
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Saqib Iqbal
