US NFP data loom as Australian Dollar tumbles against US Dollar

• 0.6862 is in focus as the Australian Dollar slides towards this level against an outperforming US Dollar.
• Safe-haven flows into the US Dollar have strengthened amid the global AI sell-off.
• September’s US NFP figures are keenly awaited by investors.

AUD/USD hit 0.6862, a fresh seven-month low. The pair reached that level during Friday’s European session as the Australian Dollar (AUD) came under heavy selling pressure against the US Dollar (USD).

A global sell-off in Artificial Intelligence (AI) infrastructure shares has lifted demand for safe-haven assets. The resulting US Dollar outperformance is driving a sharp decline in the Aussie pair.

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

Dollar recovers post-election losses; tighter US conditions add downside risk

According to MUFG analysts, 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 the currency’s resilience as US financial conditions tighten.

Following Wednesday’s US midterm election outcome, the USD Index dropped to a new monthly low near 101.00. Democrats secured majorities in both the House and the Senate.

MUFG attributes this year’s support for the currency to two factors, stating that “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 flags the policy implications, warning 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) release is the next focus for investors seeking signals on the Fed’s monetary policy outlook.

Economists expect the US NFP report to show 65K new jobs, up from September’s 29K. The Unemployment Rate is forecast to remain unchanged at 4.2%.

For the Australian Dollar, the focus is on fresh 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 messaging indicated reluctance to commit to further 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 Outlook

Trading at 0.6874 on the daily chart, AUD/USD retains a bearish short-term outlook. Spot is held below both the 20-period exponential moving average (EMA) at 0.6989 and former trend-line support near 0.6913, now acting as resistance. These overhead barriers maintain pressure on the pair. A Relative Strength Index (14) reading of 34 points to weak, though not extreme, bearish momentum. Sellers therefore remain in control despite the recent loss of momentum.

The broken rising trend line near 0.6913 provides the first resistance, ahead of the 20-day EMA at 0.6989. While the latter remains above price, it reinforces the broader bearish structure. On the downside, the previous trend-line anchor around 0.6828 offers nearby structural support. A clear break beneath it would leave scope for further declines; holding 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.)