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Key Takeaways:
*The Australian dollar eased in strength as the market reacted accordingly to the RBA monetary policy pivot.
*Market eyes on Thursday Australian job data to gauge the Aussie dollar’s strength.
The Australian dollar (AUD) has softened in recent trading, retreating from its bullish rally that started since April lows as markets digest a more cautious tone from the Reserve Bank of Australia (RBA). The May RBA meeting minutes revealed growing concerns over global trade tensions and their potential drag on economic growth, reinforcing expectations that the central bank will maintain an accommodative monetary policy stance. This dovish shift has weighed on the Aussie, tempering its earlier rally.
Adding to the pressure, China’s latest economic data has failed to meet expectations despite substantial stimulus measures rolled out earlier this year. Given Australia’s heavy reliance on Chinese demand for its commodity exports, sluggish performance in the world’s second-largest economy has further dented sentiment toward the AUD.
Attention now turns to Australia’s upcoming jobs report, due Thursday. Market consensus points to a softer reading compared to previous months, and if the data aligns with expectations, it could reinforce the case for prolonged RBA easing—potentially extending the Aussie’s decline.
In the near term, the AUD’s trajectory hinges on the interplay between domestic labor market trends, global risk sentiment, and China’s economic momentum. Should the jobs report disappoint, the currency could face additional downward pressure, while any upside surprises may offer temporary relief. However, with the RBA in wait-and-see mode and external headwinds persisting, the Aussie’s rebound appears increasingly fragile.
The EURAUD pair has been exhibiting a steady upward trajectory since rebounding from its May low of 1.7264, establishing a clear pattern of higher lows that signals growing bullish momentum. This constructive price action culminated in a decisive breakout above the critical 1.7737 resistance level – a significant technical threshold that had previously served as a major pivot point for the pair. The fact that the pair has managed to hold above this level since the breakout suggests a successful transition from resistance to support, reinforcing the bullish technical structure.
Supporting this positive outlook, momentum indicators are painting an encouraging picture. The Relative Strength Index (RSI) not only entered overbought territory during the rally but has remained elevated, indicating sustained buying pressure without showing signs of immediate exhaustion.
Meanwhile, the Moving Average Convergence Divergence (MACD) continues to trend firmly above the zero line, with its histogram expanding to confirm the strengthening upward momentum. These technical signals collectively suggest that the current bullish phase has room to extend further.
Looking ahead, the pair appears poised to maintain its upward trajectory as long as it sustains above the 1.7737 support level. The next significant resistance zones to watch include the psychological 1.7850 level, followed by the more substantial 1.8000 barrier. While the overall technical picture favors the bulls, traders should remain alert to potential pullbacks that could test the newly established support around 1.7737 – such retracements may actually present favorable opportunities to enter long positions, provided the level holds.
Resistance Levels: 1.8045, 1.8377
Support Levels: 1.7734, 1.7473
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