AUD/USD faces pressure as unemployment hits 4.5%, CPI data crucial

AUD/USD has weakened to 0.6720, declining 0.5% as Australia's unemployment rate jumped to 4.5%, the highest level since 2021. This sharp deterioration in labor market conditions directly contradicts RBA Governor Bullock's recent assessment of a 'tight' labor market, raising questions about the central bank's hawkish stance. The unexpected rise from 4.2% suggests cooling economic conditions that could prompt the RBA to reconsider its monetary policy trajectory. Markets are now intensely focused on the upcoming Australian CPI report, which will be pivotal in determining whether the RBA maintains its current stance or shifts toward potential rate cuts. Technical indicators show AUD/USD testing support at 0.6700, with resistance at 0.6750. A disappointing inflation reading could accelerate bearish momentum toward 0.6650, while any upside surprise might provide temporary relief but faces headwinds from deteriorating employment conditions.