Australian Dollar Falls After Robust US Payrolls Boost Greenback

Traders' Opinions

Summary:

AUD/USD fell toward 0.7105 after a stronger-than-expected US jobs report reinforced expectations that the Federal Reserve could keep interest rates higher for longer. While the RBA remains focused on inflation risks, renewed Dollar strength dominated market sentiment.

SELL AUDUSD

EXP

PENDING

0.70900

Entry Price

0.69500

0.71600

0.70422 -0.00905 -1.27%

Pips

PENDING

0.69500

Exit Price

0.70900

Entry Price

0.71600

The Australian Dollar weakened against its US counterpart on Friday after a stronger-than-expected US employment report prompted investors to reassess the outlook for Federal Reserve policy, boosting the Greenback and weighing on risk-sensitive currencies.

AUD/USD traded near 0.7105 during the North American session, down roughly 0.4% on the day, as markets reacted to fresh evidence that the US labor market remains more resilient than previously anticipated despite elevated borrowing costs and slowing economic momentum.

Data released by the US Bureau of Labor Statistics showed that Nonfarm Payrolls increased by 172,000 jobs in May, significantly surpassing market expectations for an 85,000 gain. April's figure was also revised higher to 179,000 from the previously reported level, further reinforcing the narrative that labor market conditions remain relatively robust.

Meanwhile, the US unemployment rate held steady at 4.3%, matching forecasts and indicating that hiring demand continues to absorb available labor supply. At the same time, Average Hourly Earnings growth slowed to 3.4% annually from 3.6% previously, suggesting that wage pressures are gradually moderating even as employment remains resilient.

For financial markets, the combination of stronger hiring and easing wage inflation represents an important development. The data suggests the US economy continues to generate jobs at a healthy pace without creating excessive inflationary pressure, a scenario that gives Federal Reserve policymakers additional flexibility as they evaluate the future path of interest rates.

The immediate market reaction favored the US Dollar. The US Dollar Index (DXY) climbed toward 99.55 following the release as traders reduced expectations for near-term policy easing and increased bets that the Fed could maintain a restrictive stance for longer than previously anticipated.

According to CME FedWatch pricing, markets now see a growing possibility that policymakers may need to keep rates elevated through year-end, with traders assigning nearly equal probabilities to a quarter-point rate increase in December and rates remaining unchanged. The shift in expectations has provided renewed support for the Greenback and pressured higher-yielding and commodity-linked currencies, including the Australian Dollar.

While US developments dominated trading, investors also continued to assess Australia's domestic economic outlook, which remains increasingly complex for the Reserve Bank of Australia.

Recent economic data painted a mixed picture, with weaker-than-expected GDP figures highlighting growing concerns about slowing economic activity. The disappointing growth numbers triggered a pullback in the Australian Dollar earlier in the week and reinforced fears that higher interest rates are beginning to weigh more heavily on household spending and business investment.

Despite those concerns, the Reserve Bank of Australia has shown little indication that it is ready to abandon its inflation fight. Analysts at BNY noted that policymakers remain concerned about persistent price pressures, supported by a tight labor market and ongoing energy-related risks that continue to threaten the inflation outlook.

RBA Governor Michele Bullock reiterated this week that restoring inflation to target remains the central bank's primary objective. She emphasized that policymakers stand ready to take whatever action is necessary to achieve price stability while maintaining full employment, a message that markets interpreted as broadly hawkish.

Technical Analysis

The broader technical picture for AUD/USD has turned increasingly bearish on the 4-hour timeframe, with the pair breaking below a key support zone near 0.7100–0.7110 that had previously acted as a floor throughout late May and early June. The latest decline follows a series of lower highs from the 0.7190 region, signaling that sellers have gradually regained control after repeated failures to sustain rallies above resistance.

Price action suggests that what was once a consolidation range has now evolved into a downside breakout. The decisive move beneath the 0.7100 psychological level is particularly significant, as this area represented both horizontal support and the lower boundary of the recent trading range. The inability of buyers to defend this region increases the risk of further downside extension in the sessions ahead.

The immediate focus now shifts to the next major support zone around 0.7000–0.7010, which corresponds with a previous area of accumulation seen in April. This level also carries psychological significance and may attract dip-buying interest. However, if bearish momentum accelerates and a sustained break below 0.7000 materializes, the decline could extend toward the 0.6950–0.6970 region, exposing the lowest levels seen in several months and confirming a broader deterioration in market structure.

On the upside, former support at 0.7100–0.7110 has now become immediate resistance. Any recovery attempt is likely to encounter selling pressure in this zone as traders who were previously long positions look to exit at breakeven. A successful recovery above this barrier would ease immediate downside pressure and open the door for a move toward 0.7180–0.7190, where a major supply zone continues to cap upside advances.

The repeated rejection from the 0.7180 area during recent weeks highlights the presence of strong overhead resistance. Until bulls can reclaim this level, the broader technical bias remains tilted to the downside. The sequence of lower highs and lower lows established since early June reinforces the view that rallies are increasingly being sold rather than accumulated.

Momentum conditions also favor the bears. The sharp decline from recent highs indicates strengthening downside pressure, while the lack of any meaningful bullish follow-through after previous rebounds suggests market sentiment has shifted in favor of sellers. The break beneath range support further confirms that momentum has transitioned from neutral to bearish.

From a market structure perspective, the pair is now trading below key support while approaching the next significant demand zone. This places AUD/USD at an important technical crossroads. A sustained move beneath 0.7000 would likely trigger another wave of selling, whereas a swift recovery back above 0.7110 would indicate the latest breakdown was a false move.

Overall, the technical outlook remains negative while prices remain below the former support zone at 0.7100–0.7110. The path of least resistance currently points lower, with traders likely focusing on the psychological 0.7000 level as the next major downside objective.

TRADE RECOMMENDATION

SELL AUD/USD

ENTRY PRICE: 0.7090

STOP LOSS: 0.7160

TAKE PROFIT: 0.6950

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