Australian Dollar remains under pressure despite stronger-than-expected jobs data

• The Australian Dollar recovers most of its losses after stronger-than-expected job creation in August.
• Australia's Unemployment Rate rose to 4.6%, limiting the positive impact of the employment report.
• Rising US Treasury yields support the US Dollar, while investors await the meeting between Donald Trump and Xi Jinping.

AUD/USD trims its losses on Thursday and trades around 0.7030 at the time of writing, down 0.15% on the day. The Australian Dollar (AUD) rebounds slightly after facing stronger selling pressure earlier in the day, supported by broadly solid Australian employment data, but remains in loss for the day as the US Dollar (USD) firms.

The Australian economy created 39.5K jobs in August, well above the 20K increase expected by markets. However, the improvement in employment was accompanied by an increase in the Unemployment Rate to 4.6%, compared with expectations and the previous reading of 4.5%.

The strength of job creation could reinforce the case for a restrictive monetary policy stance from the Reserve Bank of Australia (RBA), as a resilient labor market could keep inflationary pressures elevated and limit the central bank's room to ease policy.

The US Dollar (USD), however, continues to receive significant support from the bond market. The 10-year US Treasury yield rose to 5.15% earlier in the day, its highest level in 19 years, helping sustain demand for the Greenback and preventing AUD/USD from fully erasing its losses.

The latest US data also provides little support for a rapid easing of monetary policy. Initial Jobless Claims fell to 197K in the week ending September 19, below the 201K expected and the previous week's revised 198K. Continuing Jobless Claims edged higher to 1.719M.

Meanwhile, Bank of Cleveland Federal Reserve (Fed) President Beth Hammack said on Thursday that US inflation remains elevated while demand and economic activity remain solid. The policymaker sees inflation risks as tilted to the upside and warns that the longer price pressures persist, the more difficult it could become to return inflation toward the central bank's target.

Investors now turn their attention to Thursday's meeting between US President Donald Trump and Chinese President Xi Jinping. Discussions are expected to cover trade, Artificial Intelligence (AI), technology, Taiwan and Middle East energy supplies. US-China trade relations remain particularly relevant for the Australian Dollar due to Australia's close economic ties with China.

AUD/USD technical analysis

In the one-hour chart, AUD/USD trades at 0.7022, keeping a bearish near-term tone as the pair holds beneath the 100-period simple moving average (SMA) at 0.7094 and the 200-period SMA at 0.7108. The dense overhead structure between 0.7075 and 0.7108 suggests rallies are likely to be capped for now, while the 14-period Relative Strength Index (RSI) at 33.7 hovers just above oversold territory, hinting at persistent, but not extreme, selling pressure.

On the downside, immediate support emerges at 0.7018, ahead of a lower horizontal floor at 0.6984, where sellers could pause or book profits. On the topside, initial resistance is seen at 0.7075, followed by the 100-period SMA at 0.7094 and the 0.7105 barrier, with the 200-period SMA at 0.7108 and the higher resistance at 0.7140 forming a broader cap that AUD/USD would need to reclaim to ease the current bearish bias.

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