AUD/USD Takes A Breather As Midweek NFP Looms

10 and one 10 us dollar bill

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The Australian Dollar is holding a strong uptrend on the daily chart, with price trading well above both the 50 Exponential Moving Average (EMA) at 0.6797 and the 200 EMA at 0.6611, confirming a firmly bullish structure of higher highs and higher lows since the late November swing low near 0.6421. Monday's session saw AUD/USD push to fresh three-year highs at 0.7099, testing the psychologically significant 0.7100 handle before pulling back to close around 0.7072. The rally from December's base near 0.6500 has been steep and largely uninterrupted, with the pair clearing the 0.7000 level for the first time since February 2023. The gap between price and the 50 EMA continues to widen, suggesting the move is becoming overextended, while the Reserve Bank of Australia's (RBA) recent 25 basis point hike to 3.85% and the Federal Reserve's (Fed) dovish rate path are providing a fundamental tailwind through policy divergence.

The Stochastic Oscillator (14, 5, 5) on the daily chart is churning on the high end and testing overbought territory, signaling fading upside momentum and raising the probability of a near-term pullback or consolidation phase. Immediate resistance sits at the session high of 0.7099, with the next upside target at the 2023 high near 0.7157 if buyers can force a clean break above 0.7100. On the downside, support lies at the 0.7000 psychological level, followed by the cluster of recent consolidation lows around 0.6950 and 0.6896. The key event risk for this pair arrives on Wednesday with the delayed release of January Non-Farm Payrolls (NFP) data, originally scheduled for February 6 but postponed to February 11 due to the partial government shutdown. Consensus expects a 70K gain versus December's 50K, alongside the annual benchmark revision and unemployment rate data. A softer-than-expected NFP print would likely reinforce US Dollar weakness and fuel another leg higher toward 0.7160, while a strong report could trigger a sharper corrective pullback given the already stretched positioning. Multiple Fed speakers (Schmid, Bowman, Hammack) are also scheduled for Wednesday, adding further volatility potential around the data release.

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