Australian employment falls unexpectedly, but the Aussie dollar’s technical recovery remains intact as traders watch key Fibonacci levels and the RBA outlook.

The Australian dollar came under pressure on Thursday, August 20, after Australia’s latest labor market report showed weaker-than-expected results. AUD/USD slipped toward 0.7120 during Asian trading after gaining more than 0.5% in the previous session.

Australia’s unemployment rate rose to 4.5% in July, above the 4.4% market expectation. Employment also fell by 15,800 jobs, compared with an increase of 80,200 in June and expectations for a gain of around 15,000.

The weak data could reduce pressure on the Reserve Bank of Australia to raise interest rates further. Rabobank noted that markets were pricing only around 12 basis points of RBA rate hikes over the next three months, leaving the Australian dollar vulnerable to further pressure.

The US dollar is also facing changing expectations around Federal Reserve policy. While the Fed’s July minutes showed continued concern about inflation, more recent data has reduced expectations for an imminent rate hike.

Markets are currently pricing a 32.7% probability of a Fed rate hike at the next meeting, down from 47% a month earlier. A less hawkish Fed outlook could therefore limit the downside for AUD/USD despite weak Australian employment data.

Technical Analysis

AUD/USD remains in a bullish structure on the daily chart, with price continuing to form higher lows from the July low near 0.6865 and holding above a rising trendline.

The immediate resistance is the 0.7137 Fibonacci 0.618 level. A break above it could put 0.7190 and the psychological 0.7200 level in focus. A sustained move above 0.7200 could expose the previous swing high near 0.7278.

On the downside, 0.7072 is the key support at the 0.5 Fibonacci level. A decisive break below it could weaken the bullish structure and open the way toward 0.7023.

Momentum remains supportive, with RSI around 64.55 and MACD still in bullish territory. This suggests the latest decline is currently better viewed as a pullback rather than a confirmed bearish reversal.

AUD/USD is being pulled between weak Australian fundamentals and a potentially softer US dollar. The key levels are therefore crucial: a break above 0.7137 could revive bullish momentum toward 0.7190–0.7200, while a break below 0.7072 would signal that the recovery is losing strength.

For now, the broader bullish structure remains intact, but traders should watch whether the Australian jobs shock is strong enough to trigger a technical breakdown.