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The AUD/USD forecast suggests easing pressure on Australia’s central bank to cut borrowing costs after an upbeat employment report. However, the Aussie pulled back as the dollar recovered slightly ahead of US wholesale inflation data. 

Data on Thursday revealed that Australia added 24,500 jobs, slightly below the forecast of 25,300. Still, it was a big jump from the previous reading of 1,000. Meanwhile, the unemployment rate eased from 4.3% to 4.2%. A resilient labor market reduces the urgency for the RBA to lower borrowing costs.

Meanwhile, the dollar recovered slightly as traders awaited the US PPI report. However, rate cut bets remained elevated after the soft CPI report and downbeat employment figures. Market participants are even pricing a 7% chance of the Fed cutting rates by 50-bps.

“For the markets, it’s not even a matter of if the Fed cuts interest rates in September, it’s a question of how much,” said Kyle Rodda, an analyst at Capital.com.

“Signs of a downturn in the labour market have pushed futures to bake in a series of rate cuts before the end of the year.”

AUD/USD key events today
 

• Core PPI m/m
• PPI m/m
• Unemployment Claims

AUD/USD technical forecast: Price retreats after meeting the 0.6550 level
 

AUD/USD 4-hour chart
 

On the technical side, the AUD/USD price has paused its rally near the 0.6550 key level. As a result, bears have emerged to trigger a retreat. However, the price still sits above the SMA, showing bulls are in the lead. At the same time, the RSI is above 50, suggesting solid bullish momentum. 

The bullish trend recently made a higher high after recovering from an SMA break. However, it is clear that bulls are not committed enough to make solid swings above the SMA. At the same time, bears are showing strength with big bearish candles. This shows that the price might be in a corrective move. If this is the case, it might soon break below the SMA to retest the 0.6500 key level. On the other hand, if the SMA holds firm, the price will likely break above 0.6550 and target the 0.6600 resistance level.

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