AUDUSD – violation of current range boundaries to generate fresh direction signal, US data in focus

AUDUSD edged lower in early European trading on Wednesday, reversing some gains made in Asian session, in reaction to weaker than expected US labor data released late Tuesday.

JOLTS report showed drop in job opening to the lowest in over two years, adding to signals of gradual slowdown in the US labor market, which deflated US dollar.

Australia’s inflation report, released overnight, showed unexpectedly low monthly inflation in July (4.9% vs 5.4% in June and 5.2% f/c), which reduces risk of another rate hike and add pressure on Aussie dollar.

Technical picture on daily chart remains bearishly aligned (14-d momentum stays in the negative territory, most of MA are in bearish setup), with fresh weakness generating initial signal of repeated recovery rejection just under initial Fibo resistance at 0.6489 (23.6% of 0.6894/0.6364 bear-leg).

However, signals require confirmation, as near-term price action is in range, after a multiple failures to register close below 0.6403 (Fibo 76.4% of 0.6170/0.7157) and repeated stall of subsequent bounces.

Expect fresh direction signals on breach of either range boundary, with sustained break of 0.6472/89 (20DMA / Fibo 23.6%) upper triggers to open way for further recovery and unmask targets at 0.6547/67.

Conversely, dip below 10DMA (0.6431) would weaken near-term structure and risk renewed probe through 0.6400 zone, break of which will be bearish.

We also look for a number of important US economic releases these days (ADP, Core PCE, personal spending and NFP) which are expected to provide more details about the situation in the US economy, particularly in inflation and labor sector and influence Fed’s monetary policy decisions in the near future.

Res: 0.6472; 0.6489; 0.6547; 0.6567
Sup: 0.6431; 0.6403; 0.6364; 0.6272