AUD/USD bears move in on the 0.75 area, eyes on a significant correction

• AUD/USD runs into offers in the 0.75 area.
• NFP and Retail Sales are key events for week ahead. 

After moving up from a low of 0.7494, AUD/USD ended on Friday in the 0.75 area during markets that were mixed on Friday. AUD continues to benefit from being geographically far from Ukraine’s conflict while benefiting from higher global commodity prices. 

The AUD has been the best performing G10 currency since the start of the Russian invasion of Ukraine and LNG is a bullish theme that has been supporting the currency. Just recently, Australian prime minister Scott Morrison indicated that Australia may be able to play a part in exporting more LNG to Europe.  

Equally, according to the Reserve Bank of Australia's governor Phillip Lowe, higher commodity prices means “that terms of trade will rise over the months ahead, which will provide a boost to our national income. This boost is likely to be evident mainly in the form of higher profits for companies in the resources sector and higher tax revenue”. Equally, the improvement in the labour market and concerns that this may result in higher wage inflation have increased the chances that the RBA will hike interest rates this year.  

Domestically, for the week ahead, Retail Sales will be a focus and ''should remain strong as households run down their sizeable savings,'' according to analysts at TD Securities. ' Thus, we see sales revisiting the record high in Nov'21 soon. The outsized gains in ANZ job vacancies (+8.4% m/m) in Feb could be a preview of the likely strength in the official job vacancies data.''

The main event will come in the form of the US Nonfarm Pyroills event a the end of the week. ''Employment likely continued to advance in March following two strong reports averaging +580k in Jan and Feb,'' the analysts at TDS said.

''That said, we expect some of that boost to fizzle, though to a still firm job growth pace of +350k. Indeed, job gains should lead to a new drop in the unemployment rate to a post-COVID low of 3.7%. We also expect wage growth to slow to a still firm 0.3% m/m pace.''

AUD/USD technical analysis

The price is trapped between support and resistance for the open, and judging by the price action, there could be a significant correction in the makings for the week ahead:

From a daily perspective, the doji followed by bearish candles for the days ahead will potentially result in a test of the prior highs ad support structure as illustrated above,