- AUD/USD moderated the post-NFP rally and fell to a fresh multi-day low.
- Rising US bond yields acted as a tailwind for the USD and put pressure on it.
- A sustained break below the monthly low will set the stage for further losses.
The pair AUD/USD reversed an early North American session high to the 0.7135 region and fell to a fresh multi-day low in the last hour. The pair was last seen hovering around the 0.7065 region, down more than 0.60% for the day.
The US dollar saw some selling in reaction to the mixed US jobs report and pulled further away from a two-decade high hit on Friday. The NFP headline showed that the US economy added 428,000 new jobs in April compared to a forecast of 391,000. This, however, was offset by a slight disappointment in average hourly earnings and the unemployment rate, which, in turn, weighed on the dollar.
That said, expectations that the Fed would have to take more drastic action to rein in inflation helped limit the dollar’s decline. In fact, markets are still pricing in a further 200bp rate hike for the remainder of 2022, made evident by a further rise in US Treasury yields. This, coupled with a weaker risk tone fueled safe-haven flows into the dollar at the expense of the perceived riskier Australian dollar.
With the latest leg down, the AUD/USD has now reversed its weekly gains and has now moved well within striking distance of the monthly low around the 0.7030 region touched on Monday. Some follow-on selling would be seen as a new trigger for bearish traders and drag cash prices to the psychological 0.7000 mark. The downward trajectory could extend further towards the yearly low around the 0.6965 region.
Technical levels
Source: Fx Street
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