The AUD/USD outlook has turned slightly bearish as the Australian dollar retreats from recent highs, prompted by an unexpected spike in Australia’s unemployment rates. Meanwhile, the dollar remained weak following data showing easing inflation in the US.

Data on Thursday revealed a bigger-than-expected jump in Australia’s employment. The country added 38,500 jobs in April from the previous month, beating expectations for an increase of 23,700. However, the market focus was on the unemployment rate, which jumped from 3.9% to 4.1%. This was a sign that demand in the labor market was easing. Therefore, there is a lower chance that the RBA will hike again. 

After the report, investors raised the likelihood of a rate cut in December to 54%. As a result, the Australian dollar declined. If the chances of a cut in 2024 increase, the Aussie loses its edge against the dollar. Still, Australia will likely be among the last to lower interest rates compared to other major economies.

The decline in the AUD/USD pair came after it hit highs in the previous session due to an increase in Fed rate cut expectations. Market participants gained confidence that the Fed would cut rates in September after the US CPI figures missed forecasts. Inflation surprised to the downside for the first time this year, giving the Fed some relief that the downtrend is intact. At the same time, retail sales plunged indicating weaker consumer spending and a slowdown in the economy.

AUD/USD key events today

• US initial jobless claims

AUD/USD technical outlook: Bears resurface at the channel resistance line

(Click on image to enlarge)

AUD/USD 4-hour chart

On the technical side, the AUD/USD price is retreating after retesting its channel resistance line. Still, the bullish bias remains intact because the price has made a new high above the 0.6650 key level. Moreover, it remains within a bullish channel that formed when the trend reversed to bullish.

Therefore, a pullback could retest the 0.6650 level and the 30-SMA support before the uptrend continues. Meanwhile, a deeper pullback would retest the channel support where bulls will retake control. The bias will only shift to bearish if the price breaks below the channel support line.

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