AUD/USD slips as resurgent US dollar and falling yields weigh

US dollar surge and strong jobs data weigh on AUD

AUD/USD finished lower last week at 0.7045 (-1.93%), with the bulk of the fall coming on Friday night as the United States (US) dollar surged on risk aversion flows and a stronger-than-expected non-farm payrolls report.

The greenback’s resurgence was unmistakable after the US economy added a robust 172,000 jobs in May, well above expectations, accompanied by solid upward revisions to prior months. That report supercharged bets on a Federal Reserve (Fed) rate hike later this year and triggered a bout of risk aversion flows that weighed heavily on the broader risk complex, including US equities and the Aussie.

Softer Aussie data and yield differentials add pressure

Adding to the downward pressure on AUD/USD has been a fall in metals prices and a continuation of softer domestic data this week. Consumer confidence fell 2.9% in May to 80.6, remaining in deeply pessimistic territory as households buckle under the weight of Reserve Bank of Australia (RBA) rate hikes, high inflation and an unpopular Federal Budget. Meanwhile, the National Australia Bank (NAB) business survey, a metric closely watched by the RBA, showed confidence improved slightly to -14 but remained undeniably weak across all industries.

This run of softer domestic data was the primary catalyst behind NAB Chief Economist Dr Sally Auld’s revised view. She noted she no longer expects another RBA rate hike in this cycle and now sees the next move as a cut.

Consequently, after starting this month fully priced for another 25 basis point (bp) rate hike by year-end, the local interest rate market is now only pricing in 17 bp, roughly a 70% chance, of a final RBA hike. This contrasts with the US, where a stronger run of data now sees a full Fed rate hike priced in before the end of the year.

The net result of this shifting dynamic has been a further narrowing of the yield advantage the Aussie enjoys over the greenback. Reflecting this shift, the yield on the Australian 10-year bond, currently at 4.89%, now holds a reduced 36 bp premium over its US counterpart at 4.53%, down significantly from the 63 bp premium seen in mid-May.

AUD/USD versus AU-US 10-year spread chart

Focus turns to US CPI and geopolitical risks

With no further domestic data due for the rest of the week, the primary drivers for AUD/USD will be tonight’s crucial US consumer price index (CPI) release, risk sentiment and whether the fragile Middle East ceasefire continues to hold.

Any signs of renewed escalation in the Gulf, or a stronger-than-expected US inflation print, would likely boost the US dollar and put the Aussie under pressure as markets look ahead to next week’s RBA interest rate meeting.

AUD/USD technical analysis

Technically, the head and shoulders topping pattern highlighted last week on X here, following the softer Australia Q1 2026 gross domestic product (GDP) release, is playing out, with the pair reaching the first downside target, the psychologically important 0.7000 level.

While AUD/USD trades below the broken neckline at 0.7080ish, there is scope for the move lower to extend towards the measured head and shoulders projection around 0.6875, which is being reinforced by the 200-day moving average at 0.6835.

AUD/USD daily candlestick chart

• _{Source: TradingView. The figures stated are as of 10 June 2026 Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}