Australian Dollar Slips as US Dollar Gains on French Fiscal Worries

The Australian Dollar (AUD) has weakened against the US Dollar (USD), dropping 0.15% to around 0.6935 in Asian trading on Monday. This decline is driven by the US Dollar’s strength, which has been boosted by growing fiscal concerns in France, enhancing its safe-haven appeal. The US Dollar Index (DXY) has surged 0.5% to near 102.50, its highest level in over 17 months, reflecting broader market uncertainty.

Elias Haddad of Brown Brothers Harriman (BBH) has highlighted significant political hurdles in France, suggesting that the 2027 budget bill proposed by Finance Minister Roland Lescure is unlikely to pass without major concessions. Haddad warns that a rollover of the 2026 budget is the most probable outcome, given the limited political appetite for compromise before the April 2027 presidential election. These fiscal worries have further strengthened the US Dollar as a safe-haven asset.

On the monetary policy front, expectations for a Federal Reserve (Fed) interest rate hike in October have diminished following the US Nonfarm Payrolls (NFP) data for September, which showed moderate job growth. Meanwhile, the AUD/USD pair remains under pressure in technical analysis, trading below the 20-day Exponential Moving Average (EMA) at 0.7040. The Relative Strength Index (RSI) is around 28, indicating oversold conditions that might slow further declines but not signal a clear reversal.

Looking ahead, the AUD/USD pair faces potential downside risks below 0.6900, with the 20-day EMA acting as a key resistance level. Traders are watching for signs of consolidation or a corrective bounce in the current low zone around 0.6939.