The Australian Dollar (AUD) is paring back gains against the US Dollar (USD) on Tuesday, reversing part of Monday’s strong rally, which saw the pair climb nearly 1%. The inability to reclaim the key psychological level of 0.6500 has invited fresh selling pressure, pushing the AUD/USD pair back toward critical Fibonacci support near 0.6464.
This retracement comes as traders shift focus to the strength of the US labor market, which continues to influence expectations for the Federal Reserve’s (Fed) policy path. Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) showed job openings in April rose more than anticipated, reinforcing the resilience of the US economy and offering fresh support to the Greenback.
Market participants now await Wednesday’s ADP employment report at 12:15 GMT, which is expected to show 115,000 private-sector jobs added in April. The data is likely to provide further clues ahead of Friday’s critical Nonfarm Payrolls (NFP) release, a key barometer for labor market conditions and Fed policy expectations.
Meanwhile, the Reserve Bank of Australia (RBA) continues to tread cautiously. The latest meeting minutes released Tuesday underscored the central bank’s wait-and-see approach, with a particular focus on evolving trade conditions and global uncertainties before making any changes to its policy stance. Although the RBA acknowledged progress on inflation, it gave no clear signal of imminent tightening or easing.
This policy divergence—marked by the Fed’s hawkish bias and the RBA’s cautious stance—has capped the Aussie’s upside. However, with most interest rate moves largely priced in, short-term momentum will hinge on how incoming US economic data reshapes expectations for Fed action.
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