AUD/USD April Opening Range Intact Ahead Of Australia Employment Data

The near-term outlook for AUD/USD is clouded with mixed signals as the exchange rate appears to be stuck in a narrow range following the string of failed attempts to close below the neckline, while the Relative Strength Index (RSI) points to a larger rebound in the Australian Dollar as the indicator breaks out of the downward trend from earlier this year.

Image of DailyFX economic calendar for Australia

The update to Australia’s Employment report is anticipated to show the economy adding 35K jobs in March, and the ongoing improvement in the labor market may generate a bullish reaction in AUD/USD as it encourages the Reserve Bank of Australia (RBA) to adopt an improve outlook as “the economic recovery in Australia is well underway and is stronger than had been expected.”

However, an unexpected contraction in job growth may drag on AUD/USD as it puts pressure on the RBA to further support the economy, and Governor Philip Lowe and Co. may continue to endorse a dovish forward guidance as “Board is committed to maintaining highly supportive monetary conditions until its goals are achieved.”

Until then, AUD/USD may continue to consolidate below the 50-Day SMA (0.7713) as it tracks the opening range for April, and it remains to be seen if the decline from the February high (0.8007) will turn out to be a correction in the broader trend or a change in AUD/USD behavior as the recent flip in retail sentiment appears to be dissipating like the activity seen in 2020.

Image of IG Client Sentiment for AUD/USD rate

The IG Client Sentiment Report shows 53.03% of traders are currently net-long AUD/USD, with the ratio of traders long to short standing at 1.13 to 1.

The number of traders net-long is 6.03% higher than yesterday and 5.43% higher from last week, while the number of traders net-short is 3.13% higher than yesterday and 0.87% higher from last week. Despite the rise in net-long interest, the IG Client Sentiment ratio has narrowed from 1.20 to 1.13 as 54.49% of traders were net-long AUD/USD last week, while the rise in net-short position comes as the exchange rate continues to trade within the confines of a head-and-shoulders pattern.

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