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When writing, the AUD/USD pair trades at 0.6524, surpassing the key 0.6500 barrier with a gain of 0.32% on the day.
After initially dipping during yesterday’s trading session, the Aussie dollar found upward momentum amid a weakening Greenback. That said, the pair’s upside potential for the AUD/USD remains capped as long as markets bet on the Fed delaying cuts. A case of range-bound market forming is possible, with a potential recovery up to 0.6550 level before encountering significant resistance.
The US dollar experienced a sharp sell-off, with the DXY Index dropping below the 104 zone after seeing weaker-than-expected US data overnight. US retail sales, which tracks spending on all goods and food services, declined by 0.8% in January, breaking a two-month streak of increases.
Earlier on Thursday, domestic labour market data was discouraging, but the AUD/USD pairing managed to look past this. The Australian jobless rate unexpectedly rose to 4.1%, and Employment Change increased by only 0.5K individuals. However, this Unemployment Rate remains comfortably within the full-employment range of 4.0% and 5.75%, as estimated by the RBA. Also supporting the bank’s decision not to toss the possibility of further interest rate increases.
Despite the pair’s recent rebound, Wednesday’s notable pullback to new yearly lows indicates the potential for further short-term weakness in the Aussie dollar.
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