Make or break, do or die, now or never are all expressions that come to mind when looking at AUD/USD this week. The pair is testing a crucial inflection point ahead of key Australian employment numbers due out tomorrow and the next 48 hours could really decide the next 3 or 4 weeks of trading on the Aussie. The 0.8847 low appears to be the head of a large inverse head and shoulders reversal pattern, the neckline of which we broke at around 0.9175. That neckline break opened up a measured move to about 0.95, but significant resistance remained at 0.93-0.9350. The pair is now testing that resistance which stems from major highs back in June and July, and a break above 0.9350 would strongly suggest the Aussie has truly bottomed.
Stronger NAB Business Confidence numbers out of Australia, released last night, have helped push the Aussie into this key level ahead of the major employment data tomorrow. Economists are expecting the Aussie economy to add around 10k jobs, but are also expecting the unemployment to tick higher to 5.8%. Should we see a much stronger than expected print, the Australian dollar may begin a major squeeze higher. On the other hand, a poor showing could end the hopes of a significant AUD/USD correction higher.
Keep both eyes on this pair for the next 2 days; it should be a very interesting ride.
Written by: Liam McMahon, Currency Strategist – GlobalFxClub.com