Key Moments
- AUD/USD touched its weakest level since August 7 around 0.7025 but held above the 200-day SMA at 0.7022 and the 61.8% Fibonacci retracement at 0.7006.
- Australian employment increased by 39K in August, exceeding expectations, but the Unemployment Rate rose to 4.6% and full-time positions declined.
- Expectations for another Fed rate hike in October kept US yields elevated and supported the USD, while traders awaited a Trump-Xi meeting before taking larger positions.
Australian Dollar Pressured by Mixed Labor Data and Soft PMIs
The AUD/USD pair remained under pressure, trading with modest losses after sliding to a new low since August 7 near the 0.7025 area. Despite the decline, the pair did not see extended selling and continued to hold above a key technical floor at the 200-day Simple Moving Average (SMA).
According to the Australian Bureau of Statistics (ABS), total employment rose by 39K in August, surpassing expectations for a 20K increase and reversing a prior drop of 15.8K. However, the stronger headline figure was undermined by a reduction in full-time jobs and a climb in the Unemployment Rate to 4.6%, up from 4.5% in July.
The labor report followed earlier weakness in Australia’s flash PMIs, which indicated slower growth in services and a contraction in manufacturing. Together, these softer data points dampened expectations that the Reserve Bank of Australia (RBA) would follow through with further tightening moves beyond the widely anticipated 25 basis points (bps) rate hike next week, weighing on the Australian Dollar.
Fed Rate Hike Expectations Bolster the US Dollar
In contrast, the US Dollar maintained a firm bullish tone as markets leaned toward the prospect of another interest rate increase by the Federal Reserve (Fed). Market participants assigned a higher likelihood that the Fed would raise borrowing costs again in October.
Sentiment was supported by an S&P Global report showing that US business activity grew for a fourth consecutive month in September, marking the fastest expansion since July 2021. This backdrop kept US bond yields near multi-year highs, providing a steady boost to the Greenback and exerting additional downward pressure on AUD/USD.
Despite the supportive environment for the USD, some sellers appeared reluctant to increase bearish positions in AUD/USD ahead of an upcoming meeting between US President Donald Trump and Chinese President Xi Jinping, which traders viewed as a potential catalyst for broader market moves.
AUD/USD Technical Levels: Key Support and Resistance
From a technical perspective, AUD/USD was trading just above a cluster of important supports, reinforcing the emergence of a demand area around the 0.70 handle.
| Level | Description | Price |
|---|---|---|
| 200-day SMA | Key moving average support | 0.7022 |
| 61.8% Fibonacci retracement | Support reinforcing demand zone | 0.7006 |
| 50.0% Fibonacci retracement | Initial resistance on the upside | 0.7050 |
| 38.2% Fibonacci retracement | Next resistance level | 0.7094 |
| 23.6% Fibonacci retracement | Further resistance where gains may slow | 0.7149 |
The pair’s ability to hold above the 200-day SMA at 0.7022 and the 61.8% Fibonacci retracement at 0.7006 suggested that dips toward the 0.70 region were likely to attract buying interest. On the upside, the 50.0% retracement at 0.7050 represented the first notable resistance, followed by the 38.2% level at 0.7094 and then the 23.6% retracement at 0.7149, where upward momentum could start to fade.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
