- The Aud/USD gives ground while the markets weigh the NFP and Trump’s fiscal victory.
- The AUD/USD maintains the wedge support while the bullies fight to win traction above 0.6590.
- The solid USE employment data offers some support to the USD, but the growing deficit and uncertainty of the Fed limit profits.
The Australian dollar (AUD) is giving ground to the US dollar (USD) on Thursday. The markets are reacting to the latest Non -Agricultural Payroll (NFP) report (NFP).
The feeling is also being molded by the approval of the broad fiscal bill of President Trump.
At the time of writing, the AUD/USD is traded about 0.6570, reflecting a cautious feeling in the midst of mixed macroeconomic drivers.
Trump’s bill goes through the House of Representatives
The news that the US Chamber of Representatives has officially approved the fiscal bill “one, Big, beautiful” of President Donald Trump before the deadline of July 4 could serve as an additional catalyst for the Aud/USD.
The approval marks the first great legislative victory of Trump’s second mandate and revives the impulse of fiscal policy that defined his previous administration.
The legislation, also known as the “Gop Megabill”, aims to continue with key components of the 2017 Tax and Jobs Cutting Law.
It also introduces deeper fiscal reductions aimed at promoting economic growth. Trump celebrated the approval in Truth Social, calling it a “historical victory for US workers, families and companies.”
While the bill meets Trump’s promise of an aggressive fiscal relief, the initial projections estimate that he could add 3.3 billion dollars to the federal deficit during the next decade.
The size of the fiscal expansion, especially amid high interest rates and debt service costs, has revived concerns about the long -term trajectory of US government finances.
These anxieties, together with the renewed political uncertainty and the pressure on the Federal Reserve (FED), are weighing on the general confidence of investors in the US dollar despite the economic data in general favorable.
The NFP exceed the forecasts, but the Trump-Powell tension and the fears of the deficit limit the USD profits
The US employment data provided some support to the US dollar, reinforcing the expectations of a rate cut in September.
Non -agricultural payrolls exceeded expectations in the June report, indicating that the US workforce grew by 147,000 jobs, exceeding 110,000 anticipated.
The unemployment rate fell to 4.1% from 4.2%. Meanwhile, weekly unemployment applications decreased to 233,000, from 237,000, reflecting a resistant labor market.
While the solid employment numbers could typically raise the USD, the markets seem more focused on the broader trend, with political and fiscal concerns deterring investors.
The critic of President Trump to the president of the FED, Jerome Powell, generated concerns about the independence of the Central Bank.
The AUD/USD is still conflicted in wedge resistance
From a technical point of view, the AUD/USD continues to test the upper limit of the ascending wedge pattern in the daily chart. The failed attempts to overcome 0.6590, in an effort to re -test psychological resistance at 0.6600, have resulted in a slight setback in the price action.
The pair continues to quote above the exponential mobile socks (EMA) of 50 days (0.6467) and 200 days (0.6433), which suggests that the underlying bullish trend remains intact.
Aud/USD Daily Graph
However, the relative force index (RSI) points down but remains about 60, indicating that a bullish bias persists despite the weakening of the impulse.
A confirmed breakout above 0.6600 would probably open the door to the 78.6% of the September-April fall in 0.6722. On the other hand, a rejection at this level could trigger a setback towards the initial support at the 61.8% FIBO level in 0.6550, followed by a deeper support near the 50% decline in 0.6428.
US Dollar – Frequently Questions
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
