AUD/USD Weakens as US Dollar Strengthens on French Fiscal Fears

The Australian Dollar (AUD) is facing pressure against the US Dollar (USD) in Asian trading, with the AUD/USD pair dipping 0.15% to around 0.6935. The US Dollar Index (DXY) has surged 0.5% to approximately 102.50, marking its highest level in over 17 months. This strength in the USD is driven by growing concerns over France’s fiscal policy, as investors doubt whether the country’s 2027 budget proposal will secure parliamentary approval.

Elias Haddad of Brown Brothers Harriman highlighted the challenges, stating that the proposal is unlikely to pass without significant concessions and predicting a rollover of the 2026 budget due to limited appetite for compromise ahead of the 2027 presidential election. These fiscal worries have boosted demand for the USD as a safe-haven asset.

Meanwhile, expectations for further Federal Reserve tightening have eased following the latest US Nonfarm Payrolls data, which showed moderate employment growth. Despite this, the USD remains supported by risk sentiment linked to Europe’s fiscal uncertainties.

Technically, the AUD/USD pair is trading around 0.6939 on the daily chart, maintaining a bearish bias below the 20-day Exponential Moving Average (EMA) at 0.7040. Immediate support is seen at 0.6900, with a break below potentially targeting 0.6866. Resistance levels include the 20-day EMA and the psychological barrier at 0.7000.