Australian Dollar declines on weak labor data, US Dollar hits yearly high

• AUD/USD declines with the rising US Dollar as Australian employment data disappoints.
• Sluggish job growth and unchanged Unemployment Rate at 4.1% reduce inflation fears in Australia.
• Markets might start to bet on a less aggressive RBA.

The AUD/USD declined by 0.34% to 0.6470 in Thursday's session, extending its decline to a fresh three-month low of 0.6460. The US Dollar is easing after mixed data, while weak Australian employment data has reduced inflationary concerns, which might change the outlook of the Reserve Bank of Australia (RBA).

Lately, the AUD declined against the strengthening USD, driven by positive US economic indicators and increased confidence following Donald Trump's presidential election. Despite a neutral stance from the RBA, the central bank hinted at a possible rate cut in May 2025. The overall price action indicates that the AUD/USD pair may continue its downtrend, with the DXY reaching new yearly highs, putting pressure on risk-related currencies like the AUD.

Daily digest market movers: Australian Dollar declines due to weak labor data, US data

• Australia's job growth slowed in October, adding 15.9K workers against estimates of 25K, easing inflation concerns.
• Despite the slowdown, the Unemployment Rate remained at 4.1%, suggesting a still-tight labor market.
• The RBA is unlikely to cut interest rates soon as Governor Bullock emphasizes the need to control inflation.
• The US Dollar Index surged to a one-year high near 107.00, driven by Trump's campaign promises of higher import tariffs and lower taxes.
• Investors await Federal Reserve Chair Powell's speech for guidance on interest rate policy.
• As for now, markets anticipate the first 25-basis-point interest rate cut in Australia not before May 2025 but remain confident in a 25 bps cut by the Fed in December.

AUD/USD technical outlook: Pair's bearish momentum intact, it might start to consolidate

The AUD/USD downtrend remains intact, but oversold conditions in the daily RSI suggest a potential bounce. The indicator has reached deeply into negative territory around 30, a level that often precedes a reversal in momentum. This suggests that the pair may be due for a temporary rebound, although any gains should be viewed as corrective within the broader downtrend.

Support levels lie at 0.6450, 0.6430, and 0.6400, while resistance is encountered at 0.6500, 0.6515, and 0.6550.