AUD / USD falls to new yearly lows around 0.7005, bears target 0.7000

• AUD / USD falls sharply amid a US nonfarm payroll report that is not so bad.
• Bearish market sentiment hurts outlook for risk-sensitive currencies in forex market, AUD weakens.
• On the weekly chart, AUD / USD broke below 100 and the 200-week SMA, AUD has one eye of 0.6776.

During the American session, after a not-so-bad US non-farm payroll report, the AUD/USD It is plummeting to new lows for the year, trading at 0.7005, shedding 1.23% at the time of writing. As reflected in falling US stock indices, market sentiment is pessimistic after the US Bureau of Labor Statistics (BLS) revealed that November nonfarm payrolls grew less than expected. expected. However, the Unemployment Rate fell three tenths from 4.5% to 4.2%.

In a risk-averse tone, in the currency market, risk-sensitive currencies such as the AUD, NZD and GBP, are the main losers of the day, contrary to the dollar, which takes advantage of its safe haven.

Contradictory Nonfarm Payroll Report Drives Dollar As AUD / USD Sinks To New Yearly Lows

Meanwhile, an hour before the Wall Street open, US non-farm payrolls for November showed that the US economy added 210,000 jobs to the economy, down from the estimated 550,000. However, the positive from the employment report was the Unemployment Rate, which fell from 4.5% to 4.2%, and it is crucial because that is the indicator of the labor market for the Federal Reserve.

The headline reaction was immediate, sending AUD / USD higher to 0.7090. However, as investors scrutinized the NFP report, the AUD / USD bullish movement faded, plummeting 80 pips, to a new year low at 0.7012, and then rebounding towards 0.7025.

In the midst of those plays, St. Louis Fed Chairman James Bullard crossed the lines, saying that the US economy has recovered and is ready to grow. He noted that in subsequent meetings, the Fed would have to consider a more rapid reduction in bonds, citing that an unemployment rate of 4.2% “is a good case for removing Fed support.” Bullard also commented that the US central bank might consider raising rates before finalizing the bond cut.

AUD / USD Price Forecast: Technical Outlook

The AUD / USD weekly chart shows that as of the current week, the pair broke below the 100- and 200-week Simple Moving Averages (SMAs), indicating a downside bias in the pair. Also, as the chart shows, the Relative Strength Index (RSI), an indicator of momentum, is at 33 with enough room to support another downside extension.

Furthermore, it is imperative to note the central bank divergence between the Federal Reserve and the Reserve Bank of Australia, which has struggled to roll back rate hikes until 2024. On the contrary, the US central bank is seeking to accelerate the QE decline as inflation has risen. exceeded the bank’s target.

Hence, USD bulls have the upper hand against AUD, and since the pair is hitting new lows for the year, the move down would possibly extend further.

In that result, the first support level would be the June 2020 low at 0.6776, followed by the previous resistance level that has now turned into support at 0.6570.

Additional technical levels