AUD/USD: waiting for labor data
Kira Iukhtenko, analyst
The Australian dollar pushed to its highest level in 5 months on Wednesday on a fresh block of strong economic data. AUD/USD extended the bullish recovery, posting highs near $0.9390 in Asian trade.
The number of Australia home loan approvals rose at a highest rate since September in February (+2.3%). Record low interest rates continue supporting mortgage lending in the country. What’s more, the Australian April consumer confidence rose slightly, though remains below the key 100-point level.
Aussie’s upside remains contained by the $0.9400 mark ahead of the important employment data release on Thursday. Unemployment rate is forecasted to increase by 0.1% to 6.1% in March, while the economy is expected to add only 7.3K new jobs (February: + 47.3K). JP Morgan economists expect only a 5K employment increase for the past month.
Technically, the pair is moving in line with an inverse head-and-shoulders formation (neckline at $0.9080). Aussie has recently broken above the 55-week MA and 61.8% Fibo from the Oct.-Jan. downtrend. Our medium target lies at $0.9500 (78.6% Fibo, bottom of the weekly bearish Ichimoku).
Note that the pair is overbought; there is a MACD divergence on the H4 chart. Tomorrow’s labor market data will be a good reason for the pair to correct lower. Strong support lies around $0.9200/20.
Chart. H4 AUD/USD