The AUD/USD pair continues last week’s post-NFP bearish breakdown momentum through the 0.6400 mark and stays under intense purchase pressure on Monday. Spot prices continue to dwindle through the European session’s first half and weaken below the 0.6300 round figure, hitting the lowest level since April 2020 in the last hour.
The US dollar buying remains relentless at the start of a new week, resulting in heavy downward pressure on the AUD/USD pair. In addition, the USD Index, which measures the greenback’s performance against a basket of currencies, has risen to a one-and-half-week high and keeps drawing support from various factors.
The US monthly employment details released on Friday reflected the resilient economy, providing the Fed enough space to continue increasing interest rates faster to curb inflation. This hiked the US Treasury bond yields, which, in addition to the prevalent risk-off environment, provides support for the USD.
The market sentiment remained weak amid increasing agitations about a deeper global economic downturn, a further increase in the Russia-Ukraine conflict, and renewed US-China trade jitters.
On the other hand, the Australian dollar was destabilized by the dovish signal sent by the Reserve Bank of Australia (RBA) last week, which decided to slow the pace of policy tightening. This development complements projections for additional losses.
In addition, despite the US bank holiday observance of Columbus Day, thin trading volumes make it wise to wait for some consolidation or a modest bounce before positioning for an extension of the downtrend. Nevertheless, the fundamental backdrop reflects that the path of the slightest struggle for the AUD/USD pair is to the downside.
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