Overview
The Australian dollar (AUD) is exhibiting signs of weakness against both the US dollar (USD) and the Japanese yen (JPY) as bearish reversal patterns emerge ahead of the upcoming Australian employment report. This analysis focuses on the technical setups for AUD/USD and AUD/JPY, highlighting potential risks and market movements.
AUD/USD Technical Analysis
The AUD/USD pair is showing a potential swing high near the 70 cents mark, with bearish inverted hammer candles indicating a reversal. The daily chart reveals a volatile inverted hammer formation, suggesting that the pair may face downward pressure. The 20-day Exponential Moving Average (EMA) is acting as resistance, and a move towards 69 cents is anticipated, especially if the employment report reveals a rise in unemployment.
AUD/JPY Technical Analysis
Similarly, the AUD/JPY pair is also displaying bearish signals, although the structure is not as pronounced as in AUD/USD. An inverted hammer candle has formed on the daily chart, with the 200-day EMA currently providing support. A break below the recent lows could signal further bearish momentum, with potential targets near 109.70 and 108.78.
Impact of the Australian Employment Report
The upcoming Australian employment report is critical, as the Reserve Bank of Australia (RBA) maintains a hawkish stance amid rising inflation concerns. If the unemployment rate exceeds 4.7%, it could exacerbate the bearish outlook for AUD/USD. The report's focus will be on full-time versus part-time employment growth, with a contraction in full-time jobs likely to intensify selling pressure on the Australian dollar.
Conclusion
In summary, both AUD/USD and AUD/JPY are at critical junctures, with bearish reversal patterns suggesting potential declines ahead of the employment report. Traders should closely monitor the upcoming data for indications of rising unemployment and its implications for the Australian dollar's strength.