The AUD/USD pair moved in a relatively tight range so far in the trading year. It found strong support around the 0.76 level while the 0.80 proved to be tough resistance.
For the month of April, it trended higher, bouncing from what appears to be the neckline of a head and shoulders pattern. By failing to make a new high, the pressure mounts for a break below the 0.76 in May.
This week the most important piece of economic data comes out on Friday. The NFP in the United States follows one week after the GDP showed a strong economic recovery during the first quarter of the year.
Yet, despite the strong economic growth, the market kept selling the dollar, as the Fed still keeps the easy monetary policy. If the NFP confirms the strength in the U.S. economy, it may be that the currency market will start reflecting the strong fundamentals. If that is the case, the dollar may bounce strongly, and the AUD/USD pair should keep pressuring the neckline.
Bears may want to stay on the short side and add to the position on a break below the horizontal line. 0.7600 is key moving forward, and a move above 0.7900 should invalidate the bearish scenario.
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