The Australian dollar (AUD/USD) performed below expectations yesterday despite the news of an improvement in the employment data released. Highly bullish momentum followed after announcing a gain in jobs and a reduction in the unemployment rate. The general expectations had been a break above the resistance at $0.70675. However, all hopes were short as the Bears failed to leave the scene entirely.
What is the outcome of the Employment Data released yesterday?
The employment data released yesterday by the Australian Bureau of Statistics have shown some improvement in job creation within the country. There had been a significant improvement in the employment rate, which increased to 40K from 19.5k in March. The full-time employment increased to 92k, while the part-time jobs decreased to 88k. Thus, the unemployment rate in April came down to 3.9%, as forecasted, against the previous record of 4.0%. Many agree it can be considered the lowest Australian unemployment rate since the 1970s, indicating a significant improvement in the economy. The general market sentiment had been a strong uptrend for AUD/USD yesterday, yet the bullish momentum did not come across as expected.
What could be keeping the AUD/USD from soaring above the resistance at $0.70675?
A close study of the current market situation shows several factors have come into play that have held back the AUD/USD from breaking the resistance above $0.70675. First, the strong dollar index, currently at 103.6, seems to be a significant obstacle to the Australian dollar. The Australian dollar's primary resistance is its counterpart, paired with the US dollar. Increasing dollar strength will keep its crossed pairs from achieving their desired goals.
Similarly, the slowdown in economic engagements in some parts of China, especially Shanghai, has increased the risk-aversion that might have deterred the bulls from pushing higher as expected.
What is the next target expected for AUD/USD?
The AUD/USD pair remained bullish during the Asian session today. The general market expectation is that it breaks above the current resistance at $0.70675, which will open the way to further gains. On the contrary, should the bears dominate, the next support for the pair would otherwise be at $0.69470.