AUD/USD Forecast: AUD rallies on surprising employment gains

• The Australian economy added 47,500 jobs in August, beating estimates of 26,400.

• The RBA remained cautious as other major central banks cut borrowing costs.

• The US central bank cut borrowing costs by a significant 50 basis points, putting pressure on the greenback.

The AUD/USD forecast shows a steep rise in the pair after better-than-expected numbers in Australia. At the same time, market participants were still reeling from the US central bank’s very steep rate cut.

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Data on Thursday showed the Australian economy added 47,500 jobs in August, beating estimates of 26,400. The jump pointed to a resilient economy, reducing the chances of an RBA rate cut this year.

In addition, the unemployment rate remained steady at 4.2%. The RBA remained cautious as other major central banks cut borrowing costs. Policymakers noted that stubborn inflation could push the timing for the first rate cut to sometime next year. Initially, market participants were hoping for a rate cut in December. However, after the jobs report cut rates, expectations eased, boosting the Australian dollar.

Notably, the RBA remains an outlier after the Fed implemented its first rate cut on Wednesday. As a result, the Australian dollar has an advantage over most of its peers. The US central bank cut borrowing costs by a significant 50 basis points, putting pressure on the greenback. For months, traders have speculated about the timing and size of the first rate cut. Initially, the data supported a smaller reduction. However, this changed late last week after several key sources suggested a more significant rate cut.

The Fed has cut interest rates significantly and forecast more. More rate cuts in the US, while the RBA remains cautious, will likely keep the Aussie on top.

Key AUD/USD events today

AUD/USD Technical Forecast: Bulls break above 0.6800

Technically, the AUD/USD price has broken above the 0.6800 resistance level. The steep move pushed the price well above the 30-SMA, reinforcing the bullish trend. At the same time, the RSI is entering the overbought region, indicating an increase in bullish momentum.

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Bulls have set their sights on the key 0.6850 level. However, after such a steep climb, the price could stall and pull back to retest the 0.6800 level before continuing higher.

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