After receiving support last week from positive data from the Australian labor market, the AUD strengthened significantly, and the AUD/USD pair rose.

As reported by the Australian Bureau of Statistics on Thursday, the number of jobs in March increased by 70,700, while unemployment fell to 5.6% from 5.8% in February (the forecast was 35,000 and 5.7%, respectively). Thus, unemployment in Australia fell to the lowest level since March 2020, and the employment rate by 0.5% exceeded the pre-crisis level.

The Australian dollar also started this week on a positive note, remaining one of the growth leaders amid growing investor interest in risk. The AUD/USD pair is trading near 0.7800, 0.7815 at the beginning of the European session, which is the highest since March 19, maintaining the bullish momentum.

As follows from the minutes of the RBA's April monetary policy meeting published at the beginning of today's Asian session, central bank leaders tend to adhere to the parameters of the current policy. "As preliminary data suggest, GDP for the 1st quarter probably recovered to the area of pre-crisis levels faster than previously expected," I must say, employment returned to pre-crisis levels "much faster than predicted," the RBA said in the minutes. At the same time, the bank's management "will continue to take appropriate measures to support the Australian economy", "until the inflation and employment targets are met". The key rate will remain at 0.1% "for as long as it takes", and "the Central Bank will not raise the rate until actual inflation settles steadily in the target range of 2%-3%."

According to a recent Reuters poll, the Australian economy is expected to show the highest growth rate since 2007 amid a successful fight against COVID-19. It is expected to grow by 4.4% in 2021 and 3.2% in 2022, which is higher than previous estimates of 3.0%-3.5%. Some economists expect more substantial growth in the Australian economy (+4.7% in 2021 and +3.7% in 2022).

The AUD remains positive, strengthening against the USD and other major currencies.

Meanwhile, the US dollar continued to decline during the Asian session today. The US dollar index (DXY) at the time of publication of this article is near the mark of 90.94, 60 points below the closing price last Friday, 10 points below the opening price of today's trading day.

It seems that market participants are increasingly focusing on improving the outlook for the global economy, rather than on outperforming the US economy. Nevertheless, it cannot be ruled out that the dollar is in the correction stage after strengthening since the beginning of the year. Once US government bond yields start to rise steadily again, the dollar will also start to strengthen again, supported by rising US bond yields.

A correction in the US stock market, which has grown significantly recently amid investor optimism and their propensity to buy risky and high-yielding assets, may also provoke a strengthening of the dollar.

Today, the publication of important macro statistics for the US and Australia is not expected. It will appear tomorrow at the beginning of the Asian session when the Australian Bureau of Statistics releases retail sales data (at 01:30 GMT). The retail sales index is considered an indicator of consumer confidence and reflects the state of the retail sector in the near term. An increase in the index is usually a positive factor for the AUD; a decrease in the indicator will negatively affect the AUD. If the data is weaker than the previous value, the AUD may decline sharply in the short term; above the previous values, the AUD is likely to strengthen. Forecast: +1.0% in March (vs. -0.8% in February).

Technical analysis and trading recommendations

Yesterday, the AUD/USD pair broke through the important resistance level of 0.7750 (the upper limit of the descending channel on the daily AUD/USD chart), and today it is developing an upward trend, heading towards the important resistance level of 0.7850 (EMA200 on the monthly chart).

At the beginning of today's European session, the pair attempts to grow into the zone above the psychologically significant level of 0.7800.

OsMA and Stochastic indicators on the 4-hour, daily, and weekly charts are on the side of buyers.

The breakdown of the resistance level of 0.7800 will confirm the predominance of the upward dynamics of AUD/USD with the prospect of its growth to the resistance levels of 0.7980 (the Fibonacci level of 61.8% correction to the wave of pair's decline from the level of 0.9500 in July 2014 to the lows of 2020 near the level of 0.5510), 0.8160 (the upper limit of the ascending channel on the weekly chart).

In an alternative scenario, the AUD/USD decline will resume inside the descending channel on the daily chart and towards the support levels of 0.7540 (EMA144 on the daily chart), 0.7510 (50% Fibonacci level), 0.7440 (EMA200 on the daily chart).

The first signal for the implementation of this scenario will be a breakdown of the short-term support level of 0.7760 (EMA200 on the 15-minute chart).

A breakdown of the support level of 0.7300 (EMA200 on the weekly chart) will finally return AUD/USD to a long-term downward trend.

Support levels: 0.7760, 0.7750, 0.7704, 0.7690, 0.7600, 0.7540, 0.7510, 0.7440, 0.7300.

Resistance levels: 0.7800, 0.7850, 0.7980, 0.8000, 0.8160.

Trade Recommendations:

Sell Stop 0.7740. Stop-Loss 0.7820. Take-Profit 0.7704, 0.7690, 0.7600, 0.7540, 0.7510, 0.7440, 0.7300.

Buy Stop 0.7820. Stop-Loss 0.7740. Take-Profit 0.7850, 0.7980, 0.8000, 0.8160.