Australian Dollar trims gains after Bullock’s hawkish tone

• AUD/USD trades on a bearish bias after gaining steam earlier in the session.
• US initial jobless claims rose to 225K, but the broader labor market remains stable.
• RBA Governor Michele Bullock maintained a cautious stance on inflation, reinforcing expectations that the RBA will not rush into additional rate cuts.

The AUD/USD pair trades near 0.7140 on Thursday as the US Dollar (USD) regains traction following the latest labor market data, while traders continue to assess remarks from Reserve Bank of Australia (RBA) Governor Michele Bullock.

United States (US) Initial Jobless Claims rose to 225K in the week ending May 30, above the market expectation of 213K and up from 212K previously. Despite the increase, claims remain consistent with a relatively stable labor market. Continuing Claims also declined, reinforcing the view that labor market conditions remain resilient.

Earlier in the day, Bullock struck a relatively hawkish tone, emphasizing that the RBA remains focused on ensuring inflation returns sustainably to target. She also noted that policymakers are still assessing whether financial conditions are restrictive enough and signaled caution about premature policy easing, which supported Australian yields and helped the Australian Dollar (AUD) limit its losses.

Investors now turn their attention to Friday’s US Nonfarm Payrolls report on Friday, which will provide further clues on the strength of the US labor market and influence expectations for the Federal Reserve’s (Fed) policy path.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7141, maintaining a modest bearish bias as it sits below both the 20-period Simple Moving Average (SMA) at 0.7158 and the 100-period SMA at 0.7161. The pair is hovering just above nearby support, while the Relative Strength Index (RSI) around 44 suggests fading upside momentum, hinting that bounces may remain capped unless buyers can force a sustained break back above the clustered moving averages.

On the topside, initial resistance aligns at 0.7149, followed by the 20-period SMA at 0.7158 and the 100-period SMA at 0.7161, which together form a dense supply zone that would need to be cleared to ease the current bearish tone. On the downside, immediate support emerges at 0.7139, with further cushions at 0.7135 and the prior base around 0.7128. A drop through these levels would open the door to a deeper corrective leg in the near term.

(The technical analysis of this story was written with the help of an AI tool.)