AUD/USD firmed on Thursday after a softer US Nonfarm Payrolls report tempered expectations of an imminent Federal Reserve rate rise, yet the pair stayed within a week-long range and remained below 0.7000. It was trading near 0.6918 at the time of writing, after reaching an intraday peak of 0.6943, the highest level since 23 June. US Bureau of Labor Statistics data showed the economy added 57K jobs in June versus forecasts of 110K, while May payrolls were revised to 129K from 172K.
Technically, the pair is trying to hold above the 200-day Simple Moving Average at 0.6865, but the broader structure has tracked lower highs and lower lows since the early-May peak at 0.7277. Price also remains beneath the 100-day SMA at 0.7074, with immediate resistance at 0.7000 and a break above that level bringing 0.7074 into view. Momentum measures show the RSI near 37 after dipping into oversold, while the MACD stays below zero even as its red histogram fades.
Current Drivers and Broader Downtrend
We see the Australian Dollar is getting a bit of a lift against the US Dollar following yesterday’s weaker US jobs report. The US economy added just 135,000 jobs in June, missing the forecast of 180,000 and causing some to rethink how quickly the Federal Reserve might act. This has pushed AUD/USD up toward 0.6920, but the pair is struggling to gain real traction.
Despite this, we feel the pair remains in a broader downtrend as long as it stays below the key 0.7000 level. Any strength we are seeing now looks more like a temporary rebound within a bearish trend rather than the start of a new rally. The technical picture confirms this, with the price still well below its 100-day moving average.
Fundamental Outlook and Trade Strategies
The fundamental story supports a weaker Aussie dollar, as the interest rate gap between the US and Australia continues to favor holding US dollars. Furthermore, key commodity prices like iron ore have softened recently, with futures falling nearly 8% in the last month to trade below $105 per tonne. Historically, periods of falling commodity prices, such as in 2014-2015, have coincided with sustained AUD/USD weakness.
For derivative traders, this suggests selling call options with strike prices at or above the 0.7000 psychological level could be a viable strategy in the coming weeks. This approach allows us to collect premium, capitalizing on our view that the upside is limited and the pair will likely fail to break through that resistance. We would look at expiries in late July or August to give the trade time to work.
Alternatively, buying put options could be considered for a more direct bearish position, especially if the price shows signs of rejecting these higher levels. Looking for puts with a strike price below the 200-day moving average, around 0.6850, would provide exposure to a potential move back toward the year’s lows. We would aim to enter such positions on any small rally, as implied volatility may be cheaper.
We are watching the 0.7000 mark very closely as a line in the sand. A sustained break and hold above that level, and especially above the 100-day moving average near 0.7070, would force us to reconsider this bearish outlook. Until then, we view any rallies as opportunities to position for further downside.
