US NFP data ahead: Australian Dollar tumbles against US Dollar

• Broad US Dollar strength sends the Australian Dollar sliding towards 0.6862.
• Safe-haven buying supports the US Dollar as AI stocks suffer a global rout.
• September US NFP figures remain firmly on investors’ radar.

Heavy selling weighs on the Australian Dollar (AUD) against the US Dollar (USD) on Friday, with AUD/USD touching a new seven-month low of 0.6862 during European trading.

Demand for safety amid a worldwide sell-off in Artificial Intelligence (AI) infrastructure shares is driving the US Dollar’s outperformance and dragging the Aussie pair sharply lower.

Trading near 102.00 at the time of writing, the US Dollar Index (DXY) is up 0.42%. The index measures the Greenback against a basket of six major currencies.

Can the Dollar sustain its post-election recovery as tighter US conditions increase downside risks?

The dollar’s resilience despite tighter US financial conditions is evident in its recovery, according to MUFG analysts. 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,” although the “spillover impact from the AI-related equity market sell-off into the foreign exchange market has remained surprisingly modest so far.”

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.

According to MUFG, “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.”

Investors are looking to October’s US Nonfarm Payrolls (NFP) release, due at 13:30 GMT, for further indications of the Fed’s monetary policy trajectory.

Expectations for the US NFP report point to 65K new jobs, compared with 29K in September, while the Unemployment Rate is projected to remain unchanged at 4.2%.

For the Australian Dollar, attention centres on 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 messaging indicated reluctance over additional tightening. 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 Technical Analysis: Can Support Contain Further Losses?

A bearish short-term outlook persists for AUD/USD, which is trading at 0.6874 on the daily chart. The pair remains below both the 20-period exponential moving average (EMA) at 0.6989 and the former trend-line support, now resistance, near 0.6913. These overhead barriers continue to weigh on price action. At 34, the Relative Strength Index (14) signals weak, though not extreme, bearish momentum, suggesting that sellers retain control despite the recent slowdown.

The broken rising trend line near 0.6913 provides the first upside hurdle, ahead of the 20-day EMA at 0.6989. As long as that average remains above the price, it reinforces the broader bearish structure. On the downside, the earlier trend-line anchor around 0.6828 offers nearby structural support. A clear breach would leave scope for additional declines; staying above it would indicate only consolidation in a market still constrained by overhead resistance.

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