- AUD/USD returns below 0.6400 amid the appearance of some dollar buying.
- The positive report from the US NFP reaffirms the Fed’s interest rate hike bets and boosts demand for the dollar.
- The prevailing risk-averse state is putting additional pressure on the risk-sensitive Aussie.
The pair AUD/USD struggles to take advantage of its modest intraday bounce and attracts fresh sellers near the 0.6430 area during the early American session. The pair dips further below 0.6400 in reaction to encouraging US jobs data and is approaching the lowest level since April 2020 hit last week.
The US dollar gets some offers and hits a new weekly high after the closely watched US NFP report showed the unemployment rate unexpectedly coming in at 3.5% in September from 3.7% previously. Additional details revealed that the US economy added 263,000 new jobs during the reported month, beating consensus estimates for a reading of 250,000. The data only reaffirmed expectations that the Fed will maintain its aggressive tightening policy and continue to support the dollar, which in turn is seen to put some pressure on the AUD/USD pair.
The prospect of a faster rate hike by the US central bank triggered a further rise in US Treasury yields. This, coupled with the risk-averse state, drives safe-haven demand for the dollar and helps drive flows away from the risk-sensitive Aussie. Market sentiment remains fragile amid concerns about economic headwinds stemming from rapidly rising borrowing costs and geopolitical risk. Additionally, the less policy-prone Reserve Bank of Australia supports prospects for further AUD/USD depreciation.
Also, acceptance below 0.6400 could be seen as a new trigger for the bears. Therefore, a pullback to the low of the year around the 0.6365 area is possible. The bearish trajectory could extend further and make the AUD/USD pair vulnerable to test the next relevant support near the 0.6300 round figure.
Technical levels to watch
Source: Fx Street
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