AUD/USD Forex Signal: Head and Shoulders Pattern Indicates Downward Breakout
2025-11-06 19:46:48
The Australian dollar/US dollar exchange rate stabilized slightly during the European trading session on Thursday (November 6) after the US Supreme Court heard arguments related to the controversy surrounding Trump's tariff policies. The exchange rate also rose slightly following the latest ADP employment report, which showed that the US labor market stabilized last month.
Trump tariff hearings and US jobs data
The Australian dollar/US dollar pair has remained range-bound since the Supreme Court questioned Trump's use of emergency powers to impose billions of dollars in tariffs monthly. Polymarket data shows that as the hearings progress, Trump's chances of winning have dropped to about 20%. Even if Trump loses, he still has ways to impose tariffs on major countries like China, as well as allies such as Germany and Japan.
The Australian dollar/US dollar exchange rate reacted to the latest ADP employment report, which showed that the US added more than 42,000 jobs last month, exceeding the median expectation of 40,000 and reversing the previous month's loss of 32,000 jobs. The ADP report has been closely watched in recent weeks – with the US undergoing its longest government shutdown in history, it has become the only available labor market data.
In its recent statement, the Federal Reserve maintained that the labor market has softened significantly, which is why it cut interest rates at its last meeting.
In addition, the Australian dollar/US dollar exchange rate also reacted to the latest US services and composite PMI data. The Institute for Supply Management (ISM) reported that the services PMI rose to 52.4 in October from 50; while data released by S&P showed that the index rose to 54.8 from 54.2.
Next, the currency pair will be influenced by speeches from Federal Reserve officials such as Beth Hammark, John Williams, and Michael Barr.
Despite positive trade data for September, the Australian dollar remains under pressure against other currencies. Earlier today, data released by the Australian Bureau of Statistics showed that the trade surplus widened to A$3.938 billion in September, exceeding the expected A$3.85 billion and the previous month's A$1.111 billion. Exports turned positive, growing by 7.9%; imports rose 1.1% month-on-month, lower than the previous month's 3.3% increase.
Technical Analysis
( )
The Australian dollar stabilized on Wednesday after falling to a low of 0.6463 against the US dollar. This stabilization occurred as the exchange rate touched a key support level that coincided with an upward trendline connecting a series of lows since May 12.
A closer look reveals that the exchange rate has formed a head and shoulders pattern—a common bearish reversal pattern, with its neckline being the aforementioned upward trend line.
Therefore, the most likely scenario for the AUD/USD pair is a bearish outlook, with an initial target at the psychological level of 0.6400. This bearish outlook would be invalidated if the exchange rate breaks above the 100-day exponential moving average at 0.6541.
Bearish view : Sell the AUD/USD currency pair, setting a take-profit target at 0.6400 and a stop-loss at 0.6600. Timeframe: 1-2 days.
Bullish view : Buy the AUD/USD currency pair, setting a take-profit target at 0.6600 and a stop-loss target at 0.6400.
Trump tariff hearings and US jobs data
The Australian dollar/US dollar pair has remained range-bound since the Supreme Court questioned Trump's use of emergency powers to impose billions of dollars in tariffs monthly. Polymarket data shows that as the hearings progress, Trump's chances of winning have dropped to about 20%. Even if Trump loses, he still has ways to impose tariffs on major countries like China, as well as allies such as Germany and Japan.
The Australian dollar/US dollar exchange rate reacted to the latest ADP employment report, which showed that the US added more than 42,000 jobs last month, exceeding the median expectation of 40,000 and reversing the previous month's loss of 32,000 jobs. The ADP report has been closely watched in recent weeks – with the US undergoing its longest government shutdown in history, it has become the only available labor market data.
In its recent statement, the Federal Reserve maintained that the labor market has softened significantly, which is why it cut interest rates at its last meeting.
In addition, the Australian dollar/US dollar exchange rate also reacted to the latest US services and composite PMI data. The Institute for Supply Management (ISM) reported that the services PMI rose to 52.4 in October from 50; while data released by S&P showed that the index rose to 54.8 from 54.2.
Next, the currency pair will be influenced by speeches from Federal Reserve officials such as Beth Hammark, John Williams, and Michael Barr.
Despite positive trade data for September, the Australian dollar remains under pressure against other currencies. Earlier today, data released by the Australian Bureau of Statistics showed that the trade surplus widened to A$3.938 billion in September, exceeding the expected A$3.85 billion and the previous month's A$1.111 billion. Exports turned positive, growing by 7.9%; imports rose 1.1% month-on-month, lower than the previous month's 3.3% increase.
Technical Analysis
( )
The Australian dollar stabilized on Wednesday after falling to a low of 0.6463 against the US dollar. This stabilization occurred as the exchange rate touched a key support level that coincided with an upward trendline connecting a series of lows since May 12.
A closer look reveals that the exchange rate has formed a head and shoulders pattern—a common bearish reversal pattern, with its neckline being the aforementioned upward trend line.
Therefore, the most likely scenario for the AUD/USD pair is a bearish outlook, with an initial target at the psychological level of 0.6400. This bearish outlook would be invalidated if the exchange rate breaks above the 100-day exponential moving average at 0.6541.
Bearish view : Sell the AUD/USD currency pair, setting a take-profit target at 0.6400 and a stop-loss at 0.6600. Timeframe: 1-2 days.
Bullish view : Buy the AUD/USD currency pair, setting a take-profit target at 0.6600 and a stop-loss target at 0.6400.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
