AUD/USD consolidates its recent heavy losses to the lowest level since April 2020

• AUD/USD drops to its lowest level since April 2020 amid sustained USD buying.
• Aggressive Fed rate hike bets, surging US bond yields underpins the greenback.
• The prevalent risk-off environment further weighs on the risk-sensitive aussie.

The AUD/USD pair consolidates its recent losses to the lowest level since April 2020 and oscillates in a range around the 0.6265 region through the mid-European session.

The US dollar buying remains unabated for the fifth successive day, which, in turn, forces the AUD/USD pair to extend last week's rejection slide from the 0.6540-0.6550 supply zone. Against the backdrop of the robust US jobs data, the overnight hawkish comments by Fed Vice Chair Lael Brainard reaffirmed bets for a more aggressive policy tightening by the US central bank.

Brainard reiterates the Fed’s commitment to bring inflation down and triggers a fresh leg up in the US Treasury bond yields. In fact, the benchmark 10-year US Treasury note climbs back closer to the 4% threshold. This, along with the prevalent risk-off mood, continues to act as a tailwind for the safe-haven greenback and weighs on the risk-sensitive aussie.

Investors remain concerned in the wake of growing worries about a deeper global economic downturn amid rapidly rising borrowing costs. Apart from this, a further escalation in the Russia-Ukraine conflict and fresh US-China trade jitters take a toll on the risk sentiment. This is evident from a weaker tone around the equity markets and driving haven flows.

That said, technical indicators on the daily chart are now flashing slightly oversold conditions. This seems to be the only factor that is holding back traders from placing fresh bearish bets around the AUD/USD pair and helping limit the downside. Nevertheless, the fundamental backdrop supports prospects for an extension of the near-term depreciating move.

There isn't any relevant market-moving economic data due for release from the US, leaving the USD at the mercy of the US bond yields and the broader risk sentiment. Apart from this, scheduled speeches by influential FOMC members should influence the USD price dynamics and produce short-term trading opportunities around the AUD/USD pair.

Technical levels to watch