AUD/USD surges to a fresh-weekly high around 0.7250s, set to break above the 200-DMA

• The AUD/USD is the strongest currency in the North American session, and the greenback trades soft.
• European and US equities reflect a mixed mood; in the FX space, safe-haven peers fall.
• Fed’s Brainard: Not so sure about pausing in September because she does not have a clear sense of how the economy would be.
• AUD/USD Price Forecast: Eyeing a break of the 200-DMA around 0.7256.

For the third straight day, the Australian dollar is rallying in the North American session amidst a mixed market mood, as European and US equity indices fluctuate and the greenback falls. At 0.7253, the AUD/USD is testing the 20-day moving average (DMA) at 0.7225, though up in the day by 1.17%.

On Thursday, the market mood improved some, though it lifted the spirits in the FX space. Risk-sensitive currencies, like the AUD, are rising against most G7 peers. In the US, mixed economic data keeps investors unease after the ADP Employment Change for May, which showed that private hiring increased by just 128K vs. 300K estimated.

The ADP chief economist Nela Richardson said, “Under a tight labor market and elevated inflation, monthly job gains are closer to pre-pandemic levels.” She added that “The job growth rate of hiring has tempered across all industries, while small businesses remain a source of concern as they struggle to keep up with larger firms that have been booming as of late.”

However, the positive news is that Initial Jobless Claims for the week ending on May 28 rose by 200K, lower than the 210K foreseen. Mixed signals in the labor market keep market players guessing what would happen on Friday’s Nonfarm Payrolls estimated at 325K.

At the same time, Factory Orders for April rose by 0.3% MoM, lower than the 0.7% expected.

Talking about Fed officials crossing wires, now is the turn of the Vice-Chairwoman Lael Brainard. She said that the central bank is getting mixed signals on the economy, and the number one challenge is bringing inflation down. When asked about a Fed pause, she said it is harder to say because the policy is not on a pre-set course via CNBC.

AUD/USD Price Forecast: Technical outlook

Thursday’s price action portrays the AUD/USD as upward biased. At the time of writing, is trading above the 50-DMA and 100-DMA, each at 0.7231 and 0.7247, respectively, and eyes to challenge the 200-DMA at 0.7256. Worth noting that the Relative Strength Index (RSI) is still bullish, above the 50-midline, aiming higher and with enough room to spare before reaching overbought conditions.

Hence, the AUD/USD’s first resistance would be the 200-DMA at 0.7256. Break above would expose the 0.7300 figure that, once cleared, would send the pair climbing towards April’s 22 high at 0.7376, followed by the 0.7400 mark.

Key Technical Levels