The AUD/USD exchange rate continued its strong sell-off on Monday. It dropped to a low of 0.6140, its lowest point since April 2020. It has fallen by 11.68% from its highest level in 2024 and 24% from its 2021 highs. So, what next for the AUD to USD pair ahead of the US inflation and Australia jobs data?
AUD/USD forecast ahead of Australia jobs and US CPI data
The AUD/USD pair has continued its strong downtrend in the past few months as the US dollar index has soared. It has dropped from a high of 0.6933 in September last year to a low of 0.6140, its lowest point in April 2020.
The weekly chart shows that the pair has dropped below the key support point at 0.6272, its lowest level in October last year. It has also slipped below the crucial support point at 0.6175, its lowest swing in 2022.
The pair has also slipped below the descending trendline that connects the highest swing since March 2021. It remains below the 50-week moving average and is now at the strong, pivot, reverse point of the Murrey Math Lines.
The Percentage Price Oscillator (PPO), a unique form of the MACD, has dropped below the zero line and is pointing downwards. Also, the Stochastic Relative Strength Index (RSI) has continued falling and is at the oversold level.
Therefore, the pair will likely continue falling as sellers target the ultimate support of the Murrey Math Lines indicator at 0.5860. The stop-loss of this trade is at 0.6270.
AUD/USD chart by TradingView
Australian jobs data ahead
The AUD/USD pair will be in the spotlight ahead of Thursday’s Australia jobs data. Economists expect these numbers to show that the unemployment rate rose from 3.9% in November to 4.0% in December. They expect these numbers to reveal that the participation rate rose to 67% as the economy added over 14.5k jobs.
These numbers will provide more color about the state of the Australian economy as signs show that it is slowing. The most recent economic data showed that the economy remained sluggish in the third quarter.
It expanded by 0.8% in the third quarter, the worst reading – excluding during the Covid-19 pandemic – since 1991.
Australia’s inflation has also moved downwards in the past few months. The headline Consumer Price Index (CPI) has dropped from 7.8% in 2023 to 2.8%. Therefore, analysts expect the Reserve Bank of Australia will maintain a dovish tone this year and start cutting rates.
On the other hand, the Federal Reserve may maintain a more hawkish tone this year as inflation remains steady and the labor market strengthens. The most recent data showed that the labor market strengthened in December. The unemployment rate dropped to 4.1% as the economy created 256k jobs. As a result, analysts at ING lowered their rate estimates for the year, saying:
“We will get confirmation next month with revisions to subsequent data too. That could yet change the story, but for now we have to admit that our forecast of three rate cuts in 2025 may be too aggressive.”
The key important data to watch will be the upcoming US inflation numbers scheduled on Wednesday. Economists expect these numbers to show that the headline Consumer Price Index (CPI) rose to 2.9% in December from 2.7% in the previous month.
The AUD/USD pair may also drop ahead of Donald Trump’s inauguration on Monday. Trump has hinted that he supports tariffs, which may hurt China, Australia’s biggest trading partner.
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