The AUD/USD currency pair has attracted heightened attention among Forex traders, as recent economic data releases from both Australia and the United States have injected fresh volatility into the market. 

The technical setup remains dominated by a bearish price channel, but conflicting macroeconomic signals have made short-term direction a matter of intense debate. In this piece, LevaQuant’s brokers Mark Soler thoroughly dissect the topic for readers.

Australian Trade Surplus Surprises to the Upside

The Australian trade balance data released earlier delivered a stronger-than-expected result, which initially gave the Australian Dollar a modest boost. Exports rose by 3.3%, while imports declined by 1.3%, resulting in a trade surplus of A$7.310 billion. Economists had forecast a much smaller surplus of A$4.880 billion, meaning the actual data provided an upside surprise.

A stronger trade surplus typically lends support to the AUD, as it reflects improved demand for Australian goods, particularly commodities such as iron ore and liquefied natural gas. However, the reaction in the AUD/USD pair has been muted, reflecting the dominance of broader risk sentiment and upcoming US economic data releases, which remain the primary drivers of direction.

Focus on US Labor Market Data

The next catalyst for the AUD/USD pair is the US ADP employment report, expected to show only 73K job creations in the private sector for August, down sharply from July’s low reading of 104K. This figure matters because ADP often sets expectations ahead of the more closely watched Non-Farm Payrolls (NFP) report.

In addition, traders will monitor other labor market indicators today, including:

• Initial jobless claims provide a near real-time snapshot of employment stability.
• The Challenger Job Cuts report signals corporate downsizing trends.
• Second-quarter unit labor costs and non-farm productivity, which measure efficiency and wage pressures.

Collectively, this data will influence expectations for Federal Reserve monetary policy. Weak readings could soften the US Dollar (USD) by reinforcing the case for rate cuts in 2025, while stronger-than-expected data may keep the greenback supported.

ISM and PMI Data in Focus

Later in the session, attention will shift to the US services sector data, which has been a weak point in the economy. The ISM Non-Manufacturing PMI for August is expected to rise from 50.1 in July to 50.9. A reading above 50.0 indicates expansion, while a dip below suggests contraction.

Traders should also watch the Prices Paid component of the ISM survey, as it provides a direct signal about inflationary pressures within the service sector. Alongside this, the S&P Global Services PMI and S&P Global Composite PMI will give further confirmation of economic momentum.

Additionally, the US trade balance for July is expected to widen to $77.7 billion, up significantly from June’s $60.2 billion deficit, which could weigh on the USD and indirectly support the AUD.

Technical Outlook: Bearish Price Channel Dominates

Despite the stronger Australian trade surplus, the technical picture for AUD/USD remains bearish. Yesterday’s attempted breakout higher was quickly reversed, reinforcing the validity of the downward-sloping channel that has guided price action.

• A pending breakdown below the ascending 61.8% Fibonacci Retracement Fan level would accelerate the downside correction.
• The 50.0% Fibonacci Retracement Fan currently acts as a resistance threshold. As long as the pair trades below this level, the bearish outlook holds.

Short-term momentum indicators also reinforce the bearish bias. The Bull Bear Power Indicator has been decreasing for the past eight hours and has remained in negative territory for six consecutive hours. Moreover, average bearish trading volumes have increased, suggesting growing conviction behind the downtrend.

Risk Factors and Alternative Scenario

Although the bearish case is compelling, traders must account for potential risks. If US economic data disappoints significantly, especially the ADP employment numbers or the ISM PMI, the USD could weaken broadly, pushing the AUD/USD higher despite the bearish technical channel. In such a scenario, short positions may face rapid reversals, as the AUD typically benefits from an improved risk environment.

In an alternative bullish scenario, a strong breakout above the 50.0% Fibonacci Fan resistance could encourage traders to re-enter long positions, targeting higher levels in the short term. This would be supported if US economic indicators weaken, reducing expectations for USD strength.

Conclusion

The AUD/USD Forex signal remains tilted toward the bearish side as long as the currency pair trades within its descending price channel and below critical Fibonacci resistance levels. Stronger-than-expected Australian trade data provided only limited support, as global investors are more focused on the upcoming US labor market and services sector releases.