**AUD/USD and NZD/USD Plunge on Employment Data Shock; USD/JPY Eyes Resistance**
*Based on analysis by James Hyerczyk for FX Empire, with supplementary information from recent market reports and economic data.*
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## Overview
The foreign exchange (Forex) market is seeing significant shifts following a sharp downturn in employment data from Australia and New Zealand. Both the AUD/USD and NZD/USD currency pairs are experiencing notable declines as traders react to weaker-than-expected labor market indicators. Meanwhile, the USD/JPY is approaching key technical resistance levels as the US dollar strengthens amidst changing global economic dynamics. This article provides an in-depth analysis of these developments, examines their causes, and explores potential implications for future trading strategies.
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## AUD/USD: Sharp Drop After Australian Employment Disappointment
### Key Developments
– On Thursday, the Australian dollar tumbled against the US dollar following the release of the Australian Bureau of Statistics’ latest employment report.
– According to the data, Australian employment in May unexpectedly declined by 6,600 jobs, while analysts had forecast a gain of 20,000 positions.
– The unemployment rate climbed to 4.0 percent, rising from the previous figure of 3.9 percent, a sign that the Australian labor market is cooling more rapidly than anticipated.
### Immediate Market Reactions
– The AUD/USD pair fell by over 1 percent in early trading, dropping from near 0.6710 to around 0.6640 as traders priced in the likelihood that the Reserve Bank of Australia (RBA) will keep interest rates on hold.
– The soft labor report diminishes expectations for future rate hikes, which had been driving demand for the Australian dollar in the previous sessions.
### Contributing Factors
Here are several factors influencing the AUD/USD’s weakening momentum:
– **Soft Wage Pressure**: Weaker employment numbers often signal reduced wage growth, dampening inflation concerns and limiting room for rate increases.
– **Changing Rate Expectations**: Ahead of the jobs report, some traders speculated the RBA could resume tightening policy later in the year. This data release appears to have largely squashed such expectations.
– **Global Risk Aversion**: Recent volatility in global equity markets has also contributed to risk-off sentiment, reducing demand for risk-sensitive currencies like the Australian dollar.
– **Chinese Economic Concerns**: Australia’s economy is heavily tied to China’s performance. Slower-than-expected Chinese growth data, along with subdued commodity prices, have weighed further on the AUD.
### Technical Perspective
– Prior to the data, AUD/USD attempted to push above recent resistance at 0.6710, but has now slipped below support at the 50-day moving average, currently near 0.6645.
– Next key levels to watch:
– **Support**: 0.6600, then 0.6560.
– **Resistance**: Recovery to 0.6675, then 0.6710.
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