- AUD/USD sees some selling on Friday and breaks a two-day gain streak.
- The appearance of some purchases around the dollar puts some downward pressure on the pair.
- Recession fears and geopolitical tensions weigh further on the risk-sensitive AUD.
- The fall seems supported, while the focus of attention continues to be on the US NFP report.
The pair AUD/USD it is struggling to capitalize on its two-day recovery move, from its lowest level since July 25, and is skewed lower on Friday. The pair remains on the defensive during the first half of the European session and currently stands near the daily low, around the 0.6950-0.6945 area.
The US dollar regains some positive traction on the last day of the week, which turns out to be a key factor putting downward pressure on the AUD/USD pair. Against the background of growing fears of a recession, rising geopolitical tensions after the visit of the president of the US House of Representatives, Nancy Pelosi, to Taiwan, it offers some support to the dollar as a safe haven.
In fact, China said on Thursday it carried out “precision missile strikes” in the Taiwan Strait. as part of military exercises. The five missiles fired by China fell within Japan’s exclusive economic zone and are raising tensions in the region. Also, China said it will sanction Pelosi and ban her from entering the country.
Apart of this, a rebound in US Treasury bond yields. offers additional dollar support amid repositioning trade ahead of key data. The monthly NFP employment report in the United States will be released later in the American session today and will influence the price dynamics of the dollar.
With the background of more aggressive comments from various Fed officials this week, stronger US data would revive expectations for a bigger rate hike at the September FOMC meeting. This would be enough to boost the dollar. Conversely, any disappointment would further fuel recession fears and act as a tailwind for the safe-haven dollar. This, in turn, suggests that the path of least resistance for the AUD/USD is to the downside.
AUD/USD technical levels
Source: Fx Street
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