Australian Dollar lost its intraday gains after the release of weaker employment data.

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• Australian Dollar lost its intraday gains after the release of weaker employment data.
• Australia Unemployment Rate rose by 4.1% from 3.9% prior, exceeding the expected 4.0% in January.
• AUD received support from the improved Australian ASX 200 Index.
• US Dollar depreciates due to the decline in the US Treasury yields.

The Australian Dollar (AUD) relinquished its intraday gains and slipped into negative territory following the release of downbeat Australian Employment data on Thursday. However, the AUD/USD pair managed to advance during early Asian hours on Thursday, supported by a weakening US Dollar (USD) and improved risk appetite in the market.

Australian Dollar found some upward momentum as the S&P/ASX 200 Index surged above 7,600 on Thursday, mirroring a rebound in Wall Street overnight. Strong corporate earnings and an optimistic corporate outlook overshadowed concerns about inflation and interest rates. Reserve Bank of Australia Governor Michele Bullock addressed Parliament, highlighting persistent inflation, particularly in services, but also noted a gradual decline in inflationary pressures.

The US Dollar Index (DXY) encountered difficulties amid subdued US Treasury yields, reflecting a significant shift in market sentiment. Expectations for no rate adjustment by the Federal Reserve (Fed) in the upcoming March meeting surged to nearly 90%. According to the FedWatch Tool, investors are now pricing in a modest 37% probability of a rate cut in May, with the likelihood of a 25 basis points (bps) rate cut increasing to approximately 53% in May.

The Australian Dollar trades near 0.6490 on Thursday following the next major support at 0.6450 before the weekly low at 0.6442. A break below this level could push the AUD/USD pair to navigate the region around the psychological support of the 0.6400 level. On the upside, the AUD/USD pair faces a significant resistance level at the psychological threshold of 0.6500. If this level is breached, it could potentially propel the AUD/USD pair toward the 14-day Exponential Moving Average (EMA) located at 0.6522. Further upward movement may target the 23.6% Fibonacci retracement level at 0.6543, followed by the major resistance level at 0.6550.

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