NFP Data Reshapes Forex Markets: AUD/USD Reaches 3-Year High on Policy Divergence

The Australian Dollar has staged a remarkable rally in the forex markets, climbing to its highest level since August 2022 as diverging monetary policy signals between the Federal Reserve and the Reserve Bank of Australia create fresh trading opportunities. The catalyst came from a stronger-than-expected US Non-Farm Payroll report showing 130,000 jobs created, significantly above the 70,000 consensus forecast. However, a deeper examination of the NFP report reveals substantial revisions that complicate the narrative for USD traders.

Understanding the Mixed NFP Signal in Forex Trading

The headline NFP beat masked concerning underlying labor market trends. Massive downward revisions to payroll data—including a stunning 898,000 reduction for March 2025 alone—painted a much weaker picture of American employment momentum. The average monthly job gains for 2025 were slashed to just 15,000 from the previously reported 49,000, suggesting the initial growth narrative was overstated.

This contradiction is crucial for forex investors: while the February NFP number supported the USD initially, the substantial historical revisions signaled a more entrenched economic slowdown. Market participants quickly repriced their expectations, interpreting the revisions as confirmation that the US labor market is softening more than headline figures suggest. The result was a USD selloff that directly benefited AUD/USD and other commodity-linked currencies.

Central Bank Divergence Fuels the AUD Rally

On February 3, the RBA delivered its first rate increase since late 2023, hiking the cash rate 25 basis points to 3.85% in response to persistent inflation pressures. The decision marked a stark contrast to the Federal Reserve’s cautious stance, with markets now pricing in fewer US rate cuts than previously anticipated.

RBA Deputy Governor Andrew Hauser reinforced the hawkish outlook on Wednesday, warning that inflation remains elevated and signaling further tightening is likely. This explicit guidance creates a forex headwind for the USD, as investors reassess interest rate differentials between the two currencies. The policy divergence—with Australia tightening while the Fed holds course—has become the primary driver for AUD/USD strength in recent sessions.

Data Watch: Critical Tests Ahead for AUD/USD

The coming week presents several key risk events for forex traders monitoring the pair. Thursday’s Australian Consumer Inflation Expectations data could reinforce the RBA’s hawkish narrative if consumer price outlook remains elevated. More significantly, Friday’s US Consumer Price Index report represents the week’s main event: consensus expects headline CPI to moderate to 2.5% year-over-year from 2.7%, while core CPI month-over-month is forecast at 0.3%.

A softer-than-expected CPI reading would extend the downtrend in USD valuations and propel AUD/USD higher, while an inflation surprise could interrupt the rally and trigger profit-taking. Fed speakers including Logan and Miran are scheduled to speak Friday, potentially offering additional clues about the central bank’s policy direction.

Technical Breakout Confirms Forex Momentum

On the daily chart, AUD/USD is trading near 0.7130, up 0.77% following the NFP data release, with the pair reaching an intraday high of 0.7143. The technical picture confirms strong bullish momentum: the pair sits firmly above both the 50-day Exponential Moving Average (EMA) at 0.6810 and the 200-day EMA at 0.6616, establishing a clear trend of higher highs and higher lows since December’s low of 0.6466.

The recent rally has been aggressive, with the pair gaining over 600 pips from the late-January consolidation zone near 0.6700. The Stochastic Oscillator (14, 5, 5) reads 86.24/79.19—deep in overbought territory—suggesting momentum is stretched, though the indicator has not yet flashed a bearish crossover signal that would confirm a reversal.

Price Targets and Risk Levels for Forex Traders

Resistance above the session high of 0.7143 opens the path toward the psychologically important 0.7200 level, with extended targets near 0.7250 if buying pressure remains intact. Support operates at the 0.7000 round number, with a secondary floor at the late-January consolidation range between 0.6930 and 0.6900.

For forex traders, a daily close above 0.7143 would suggest continued momentum toward the 0.7200-0.7250 zone. Conversely, a pullback below 0.7000 would signal a deeper correction, with the 0.6930 level representing a critical holding point where the original breakout zone and prior resistance-turned-support converge. NFP revisions and upcoming CPI data will likely determine whether the pair can sustain its breakout above these key technical barriers.