Australian Dollar tumbles against US Dollar as US NFP data release approaches

• Near 0.6862, the Australian Dollar falls sharply as the US Dollar outperforms.
• Safe-haven demand for the US Dollar strengthens amid the global AI sell-off.
• September’s US NFP figures are keenly awaited by investors.

A fresh seven-month low of 0.6862 was recorded by AUD/USD during Friday’s European session, as the Australian Dollar (AUD) came under heavy selling pressure against the US Dollar (USD).

Behind the pair’s sharp decline is the US Dollar’s outperformance: a worldwide sell-off in Artificial Intelligence (AI) infrastructure shares has boosted demand for safe-haven assets.

At the time of writing, a gain of 0.42% takes the US Dollar Index (DXY) to around 102.00. The index measures the Greenback against six major currencies.

Dollar recovers post-election losses as tighter US conditions increase downside risks

Despite tighter US financial conditions, the dollar has shown resilience, according to MUFG analysts. They describe how the “spillover impact from the AI-related equity market sell-off into the foreign exchange market has remained surprisingly modest so far.” Nevertheless, they say the episode “has resulted in the dollar index reversing all of its initial losses since the US mid-term election results were announced,” highlighting that resilience.

Following Wednesday’s US midterm election outcome, which gave Democrats a majority in both the House and the Senate, the USD Index dropped to a new monthly low around 101.00.

In MUFG’s assessment, “US dollar strength this year has been supported by higher energy prices and record foreign demand for riskier US assets.” The bank nevertheless cautions that “if both these drivers continue to reverse, it would increase the likelihood of the US dollar weakening,” especially should appetite for US assets deteriorate further. It also warns that “if financial conditions continue to tighten it could make it less likely that the Federal Reserve (Fed) will hike again in December as planned thereby adding to downside risks for the US Dollar.”

Due at 13:30 GMT, October’s US Nonfarm Payrolls (NFP) figures are the next release investors are watching for further guidance on the Fed’s monetary policy outlook.

Forecasts for the US NFP report point to 65K new jobs, up from September’s 29K, alongside an unchanged Unemployment Rate of 4.2%.

For the Australian Dollar, attention centres on further indications of whether the Reserve Bank of Australia (RBA) will raise interest rates again this year. Five quarter-percentage-point increases so far in 2026 have taken the Official Cash Rate (OCR) to 4.85%.

Although the RBA raised rates this week, its accompanying communication suggested reluctance to tighten further. RBA Governor Michele Bullock said, “Voters favoring pause perceived greater downside risks,” and added, “Those favoring a hold wanted to wait longer for data.” She also said, “Not definitely hiking rates again, preserving options.”

AUD/USD Remains Under Technical Pressure

Trading at 0.6874 on the daily chart, AUD/USD retains a bearish short-term outlook. Both the 20-period exponential moving average (EMA) at 0.6989 and former trend-line support, now resistance near 0.6913, continue to cap the spot price. With the pair below these important overhead levels, pressure persists. A Relative Strength Index (14) reading of 34 points to subdued, though not extreme, bearish momentum, suggesting sellers remain in control despite the recent loss of pace.

The broken rising trend line near 0.6913 provides the first resistance, ahead of the 20-day EMA at 0.6989. While that average remains above the price, it reinforces the wider bearish structure. Nearby structural support lies at the earlier trend-line anchor around 0.6828. A clear breach of this level would pave the way for additional declines; holding above it would indicate only consolidation within a market that remains capped overall.

(The technical analysis of this story was written with the help of an AI tool. Know more.)