AUD/USD Retreats Following a Rejection At Key Resistance

AUD/USD is seen correcting lower following a surge in the exchange rate on Wednesday. The pair reversed at the European open and has
erased about 40% of the recent rise.

The Australian jobs report was somewhat mixed and aside from some immediate volatility, did not have a meaningful impact on the exchange rate.

The Australian Bureau of Statistics reported an additional 27,900 jobs in July. While this was above the analyst estimate of 19,800 jobs, the gain was entirely attributed to part-time employment as full-time figures declined. The unemployment rate was reported at 5.6% as expected and against a prior 5.7% that was revised up from an originally reported 5.6%.

Out of the United States today, unemployment claims were reported at 232,000 for the week to August 14th which was ahead of an expected 240,000 claims.

Resistance in AUD/USD at 0.7960 triggered the reversal today. The level has been well-respected as of late, acting as both resistance and support since late July on several attempts.

Yesterday’s single day rally erased a week’s worth of gains and broke the pair higher from a declining trend channel that dates back to a high posted at the end of July. The bullish break and the engulfing candle on a daily chart signal that dips will be bought in the pair.

Support for the pair is seen at 0.7874 which marks the July 20th spike low. The level resides near the 61.8% retracement measured from this week’s low to this week’s high and also falls within proximity of the upper line of the previously broken declining trend channel.

AUD/USD 4-Hour Chart

AUDUSD 4H Aug 17

Jignesh is an analyst and trader, specializing in currencies and commodities. He utilizes a macro view as well as a proprietary method of pattern recognition that is based on the principles of Elliott wave. His focus is to assess strength in trends, and perceiving high potential turning points in the markets. He brings over 4 years of experience in his current role.