The Australian dollar drops after the release of Australia’s employment data. However, the pair remains in a broad consolidation zone due to the ongoing trade crisis. However, the weakness in AUD/USD is further supported by the strength in the US Dollar, which has rebounded from the strong support of 96.50 to reach the resistance of the 50-day SMA at the 99 area.
On the other hand, the RBA’s cautious tone, with three members favouring a rate cut and six voting to hold, reflects internal uncertainty and adds pressure on the Australian dollar. With markets pricing in a 90% chance of an August cut, AUD may continue to drop if inflation meets forecasts.
Moreover, Australia’s June jobs data has disappointed. Only 2,000 jobs were added, compared to the expected 20,000, with full-time employment dropping sharply.
The 4-hour chart for AUD/USD shows that the price is trading within an ascending broadening wedge pattern. The recent consolidation in AUD/USD is driven by a strong rebound in the US Dollar Index, which is rising from long-term support at 96.50 toward the 100.50 area.
This rebound in the US dollar has triggered a sharp correction in the AUD/USD exchange rate. The pair remains range-bound between the 0.64 and 0.67 levels. A break of either level will define the next directional move for AUD/USD.
