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Technical analysis Published Updated

AUD/USD: The 0.70 Breakout Was a Fakeout. Two Punches, CPI and Jobs

AUD/USD broke above 0.70, then a hot US CPI and a shock Australian jobs report (−39.3K vs +19.6K expected, unemployment 4.7%) pushed it to a three-month low. What the failed breakout leaves on the chart, and the data that matter next week: China Q3 GDP and the RBA on 3 November.

Post-close market review. Educational content; it describes levels on the chart, not a recommendation to trade.

Last week's question: breakout or fakeout?

Last week we asked whether AUD/USD breaking above 0.70 was the start of a move or a trap. The answer came in two punches.

Round 1: US inflation

On Wednesday 14 October US consumer prices for September came in hotter than expected: 3.7 % on the year against 3.6 % forecast, with core inflation at 2.6 %. The dollar and Treasury yields rose. AUD/USD, which had just traded above 0.70, turned back below it.

Round 2: the Australian jobs shock

On Thursday 15 October Australia reported that employment fell by 39,300 in September, against economists' expectations of a +19,600 rise. The unemployment rate rose to 4.7 % from 4.6 %, and participation fell to 66.8 %. Markets cut their bets on another rate rise by the Reserve Bank of Australia, and the Australian dollar was the weakest major currency of the day, falling as much as 1.1 % to a three-month low.

What the chart shows now (4-hour)

  • Back below 0.70. The ascending triangle that pushed price above 0.70 failed: the breakout did not hold for more than a few sessions.
  • The 1 October low (≈ 0.6905) was broken on the jobs report, with a low near 0.6895.
  • A small bounce to about 0.6945 followed on Friday, after Fed Chair Kevin Warsh said he would not prejudge upcoming meetings.

Levels on the chart

Level What it is
0.7000 – 0.7010 the broken breakout zone: first resistance on a bounce
0.6990 lower edge of that zone
0.6945 Friday's bounce
0.6905 1 October low, broken on Thursday
0.6885 – 0.6895 Thursday's low area

A failed breakout often leaves the old breakout level as resistance. Back above 0.7010, the fakeout reading is wrong and the range from before the jobs report is back in play.

Next week (Bucharest time)

  • Monday, 05:00: China Q3 GDP, with retail sales and industrial production. China is Australia's largest export market, so this is the main event for AUD. A strong number could lift AUD/USD towards the 0.70 zone.
  • All week: Fed speakers, after the hot CPI.
  • 3 November: RBA decision (meeting on 2–3 November).

The lesson

A breakout is a claim, and the market checks it. Here it took two data releases in two days to show that 0.70 was not accepted. Watching how price behaves when it comes back to the broken level tells more than the breakout itself.

Educational content, not financial advice. Forex trading involves significant risk of loss.

Sources

AUDUSDtechnical analysisRBAChinafakeout

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