AUD/USD slumps amidst Israel-Gaza  woes, strong US Dollar

• AUD/USD hits a daily high of 0.6328 before dropping due to heightened Middle East tensions.
• US Dollar remains strong, with US equities in the red and Treasury bond yields dropping.
• Latest Aussie employment report shows easing labor market, aligning with the RBA's decision to keep rates at 4.10%.

The Australian Dollar (AUD) dropped vs. the US Dollar (USD) on Friday in the mid-North American session after the pair hit a daily high of 0.6328. Still, risk-aversion amidst heightened tension in the Middle East weighs on the AUD/USD, which trades at 0.6318, down 0.17%.

Australian Dollar falls 0.17%, as geopolitical risks and US economic factors weigh in

The Greenback (USD) remains strong as risk appetite keeps US equities in the red, while US Treasury bond yields dropped. The Israel-Hamas conflict is at the brisk of an escalation, while US Federal Reserve (Fed) officials dictate the path of market sentiment.

On Friday, two Federal Reserve officials remained cautious regarding monetary policy, though both expressed that inflation remains high and the Fed would need patience.

Atlanta’s Fed President Raphael Bostic stated that along with opening the door for a rate cut in 2024. In the meantime, Cleveland’s Fed President Loretta Mester said the Fed is at or near peak rate hike cycle, adding that the US central bank would be data defendant in the next monetary policy meeting.

Aside from this, the latest Aussie employment report showed the labor market is easing, a welcome development by the Reserve Bank of Australia (RBA), which kept rates unchanged at the last meeting at 4.10%, despite speculations for further tightening. Governor of the Reserve Bank of Australia, Michele Bullock stated that if inflation persists above projections, the RBA will take responsive policy measures.

AUD/USD Price Analysis: Technical outlook

The daily chart shows the downtrend is intact, as the current week’s high aligns with the recent market structure of lower highs and lows, which could pave the way for additional losses. If AUD/USD slides beneath 0.6285, the pair could aim lower and challenge the October 21 daily low of 0.6210 before testing the latest cycle low of 0.6169. Conversely, if the pair stays above 0.6300, Aussie (AUD) buyers could remain hopeful of testing the 50-day moving average (DMA) At 0.6405. Once cleared, the latest cycle high could be exposed at 0.6501.