AUD/USD Forecast – Momentum Trending Lower Ahead of NFP Report

The Australian Dollar is edging lower against the U.S. Dollar on Friday as traders positioned themselves ahead of the U.S. Nonfarm Payrolls report, due to be released at 13:30 GMT. At 08:04 GMT, the AUD/USD is trading 0.7062, down 0.0015 or -0.22%.

The U.S. Labor Department’s closely watched employment report is expected to show that nonfarm payrolls increased by 185,000 last month after rising by 223,000 in December, according to a Reuters survey of economists.

Average hourly earnings have forecast rising 0.3% after a similar gain in December. That would lower the year-on-year increase in wages to 4.3% from 4.6% in December. The unemployment rate is expected to tick up to 3.6% from a more than 50-year low of 3.5% in December.

Coming in at this figure would allow the Fed, focused on wage inflation, to maintain a moderate pace of rate hikes and reduce the risk of a recession this year. A weaker-than-expected report will support the case for the Fed’s early exit from its rate-hiking campaign in March.

This would be potentially supportive of the AUDUSD. Strong data, especially average wage growth, could greenlight more rate hikes from the Fed after March and a terminal rate above 5%. The main trend is up according to the daily swing chart. However, momentum is trending lower following the confirmation of Thursday’s closing price reversal top.

A trade through .7158 will negate the potentially bearish chart pattern and signal a resumption of the uptrend. A move through .6984 will change the main trend to down. The minor range is .6984 to .7158.

The AUD/USD is currently trading on the weak side of its pivot at .7071, making it resistant. The nearest support is a 50% level at .7009. The closest resistance is the price cluster at .7137 to .7158.

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