Australia’s unemployment rate rose to a two-year high of 4.1% in January, while employment was little changed although analysts had expected around 25,000 new jobs, data released this morning showed.
It is believed that weak labour market data should prompt central bank officials to ease monetary policy, which is currently aimed at fighting inflation. According to Trading Economics, the Reserve Bank of Australia is expected to cut interest rates by about 40 basis points this year.
The first reaction to the news was the weakening of the Australian dollar (counting on the easing of the Central Bank’s policy), but by the opening of the European session, the price of AUD/USD had recovered a significant part of the decline, which provides important food for thought.
The AUD/USD chart shows that the price is within a downward trend (shown by the red channel), however, there are a number of signs that the bearish pressure has exhausted. The fact that the AUD/USD price is showing some recovery after the initial negative reaction to the unemployment news is one such sign.
It should also be noted that:
→ the median line of the descending channel now acts as support;
→ MACD moved into the green zone;
→ the price was unable to consolidate below the level of 0.647.
This means that if we regard the fundamental background as bearish, then the price shows stability through its action, which can be regarded as a manifestation of the forces of demand. Therefore, it is possible that the bulls will try to break through the upper limit of the current downward channel. If this happens, the price may face resistance at 0.65350.
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