The Australian Dollar (AUD) declined by 0.25% to near 0.7130 against the US Dollar (USD) during the European trading session on Friday, pressured by fading hawkish expectations for the Reserve Bank of Australia (RBA) following weaker-than-expected Australian employment data for April [1]. The unemployment rate in Australia rose to 4.5%, above the expected 4.3%, with employers cutting 18.6K jobs instead of the anticipated addition of 17.5K positions [1]. This unexpected deterioration in the labor market has raised concerns about the RBA's willingness to continue its monetary tightening cycle at the upcoming June policy meeting [1].
Analysts at Westpac now have a high-conviction call that the RBA will pause rate hikes in June, though they still expect the tightening cycle to broadly continue due to persistent inflation concerns [1]. The US Dollar's strength also contributed to the AUD's weakness, with the US Dollar Index (DXY) trading 0.1% higher near 99.30 [1].
From a technical perspective, United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann observed that the AUD/USD pair rebounded sharply to a high of 0.7175 two days ago, but momentum remains unclear [2]. In the short term, they expect the pair to trade between 0.7120 and 0.7175, noting that downward momentum is slowing rapidly. A break above 0.7180 would indicate that the recent weakness has stabilized [2]. However, their broader 1–3 month outlook still points to a lower AUD/USD, targeting 0.6765 if the 0.6850/0.6870 support area breaks [2].
Looking ahead, market participants are also watching for potential geopolitical developments, as statements from Washington and Tehran regarding a peace deal could act as a major trigger for the pair and global markets [1].
CONCLUSION
The Australian Dollar's decline was driven by disappointing employment data and fading expectations for further RBA tightening, though some analysts see signs of stabilization in the near term. Technical analysis suggests the AUD/USD could consolidate before resuming its broader downtrend if key support levels break. Market participants remain cautious, awaiting both central bank signals and geopolitical developments.