The Australian Dollar surged sharply as markets aggressively repriced interest-rate expectations following much stronger-than-expected jobs data. The rally reflects a swift reassessment of policy risk, with labor market resilience undermining the assumption that unemployment would drift higher and cool inflation pressures on its own.
The key shift is the absence of any rise in unemployment, which raises the risk that inflation could re-accelerate without additional policy restraint. In that context, markets are increasingly open to the idea that another rate hike may be required in the near term to keep price pressures contained.
That said, conviction remains conditional. The decisive input will be next week’s quarterly inflation report, which is likely to determine whether labor strength translates into a renewed inflation problem or simply reflects lagging labor-market adjustment.
Technically, AUD/USD broke above 0.68 handle, with D MACD suggesting the move is accelerating. The next immediate target sits at 61.8% projection of 0.5913 to 0.6706 from 0.6420 at 0.6910. As long as 0.6667 support holds, near-term outlook remains bullish, even if consolidation emerges along the way.
More importantly, the current advance strengthens the case that the rally from 0.5913 is reversing the entire downtrend from 2021 high at 0.8006. Firm break above 0.6941 would be a solid confirmation. Next target will be at around 0.72, which is 100% projection at 0.7213, which is close to 61.8% retracement of 0.8006 to 0.5913 at 0.7206.
AUD/JPY is also surging, with the uptrend from 86.03 (2025 low) on track to retest 109.36, 2024 high. Given current momentum, a break above that level is likely to resume the long-term uptrend from 59.85 (2020 low). In any case, outlook will stay bullish as long as 105.20 support holds.
