Australian Dollar edges up against US Dollar with NFP data in focus

The Australian Dollar (AUD) gains slight momentum, trading near 0.7040 against the US Dollar (USD) during the European session on Friday. This movement occurs as investors monitor the US Nonfarm Payrolls (NFP) data, scheduled for release at 12:30 GMT. In the meantime, the US Dollar Index (DXY) hints at a modest decline to approximately 99.92.

Analysts predict the upcoming US payrolls report will indicate a slight increase in job creation, with an estimated 70,000 new jobs added in July. TD Securities advises that an unexpectedly strong report could bolster interest rate hike expectations, especially given the Federal Reserve's (Fed) projected to maintain its federal funds rate at 4.2%.

The technical analysis also points to the AUD/USD pair trading above the 20-day Exponential Moving Average (EMA) at 0.7004 and within a higher parallel channel, implying sustained bullish sentiment. Conversely, if the NFP data disappoints, the AUD may face downside pressure, with support found at the 20-day EMA at 0.7004. The Reserve Bank of Australia (RBA) is expected to maintain its interest rate at 4.35% during its August meeting, as indicated by Standard Chartered analysts, who anticipate an inflationary environment supporting this stance.

Meanwhile, other currencies such as GBP/USD and EUR/USD face varying levels of volatility and downward pressure due to economic indicators and trade tensions.