The Australian Dollar (AUD) saw a strong performance on Friday, rising 0.35% against the US Dollar (USD) to trade around 0.6980 during the European session. This gain was driven by a positive market sentiment, fueled by a sharp correction in US Treasury yields.
At the time of reporting, 10-year US bond yields had increased by 0.17% to near 2.44%, though they had pulled back significantly after failing to extend their rally beyond the two-decade high of 5.36%. Meanwhile, S&P 500 futures climbed 0.33% to around 7,800, signaling improved investor risk appetite.
Analysts at Danske Bank noted that US yields declined sharply due to strong demand in a recent 30-year Treasury bond auction, highlighting sustained investor interest at current yield levels. Looking ahead, key drivers for both the USD and AUD will be the US Consumer Price Index (CPI) and Australian employment data for September, set to be released next week.
Technically, AUD/USD is trading at 0.6980, maintaining a bearish near-term outlook as the pair remains below the 20-day Exponential Moving Average (EMA) at 0.7020. The Relative Strength Index (14) near 39 suggests weak but stabilizing momentum. On the upside, resistance lies at the October 6 high of 0.6990, followed by the 20-day EMA at 0.7020. Support levels are found at the October 8 low of 0.6933 and the October low of 0.6903.