The greenback renewed its strength Thursday, sending the EUR/USD pair below 1.18, which undermined the Australian dollar as well, sending it toward the essential support.
Busy Australian sessions
Earlier in the day, the Australian labor market showed a notable weakness amid the ongoing lockdown in the country. The employment change cratered to -146,300 in August, down from 2,200 in July, showing some massive lay-offs in the economy as businesses are ordered to remain closed. On the other hand, the unemployment rate improved slightly to 4.5% from 4.6% previously.
Additionally, the RBA economic bulletin was released today, showing insights into the Australian economy. It noted that economic conditions for small and medium-sized enterprises (SMEs) improved in the second half of 2020 and early 2021, although measures to contain the recent outbreaks of COVID-19 have affected firms in much of Australia.
Since the lockdown in Australia is neverending, we might expect another lousy time for small and medium-sized businesses.
Earlier in the week, the RBA governor Lowe undermined the Australian dollar, saying he does not understand why the market is pricing any rate hikes soon. He reiterated that the central bank plans to keep rates unchanged till late 2023. That was a relatively dovish comment and a piece of negative news for the Aussie.
Later in the day, the US retail sales figures are due and expected to remain negative, although they should show a slight improvement month-on-month. Additionally, US jobless claims will be released.
Short-term outlook negative
Technically speaking, the AUD/USD pair has dropped below its 50-day moving average, changing the short-term bias to bearish. The pair is now licking the critical support line of previous lows at 0.7315, and if it closes below it on a daily basis, the medium-term outlook could change to bearish.
In that case, the next target would be at 0.7250, and the retest of the current cycle lows at 0.71 cant be ruled out. It looks like the Fed might be faster to tighten monetary policy, potentially supporting the USD against the AUD.
Alternatively, if the pair starts rallying again, the first selling zone is spotted at the 50-day average at 0.7350. A breakout above that level could lead to another leg higher, target 0.74, or the actual swing highs near 0.7450.