AUD/USD looking for lower ground below 0.78 handle?

Currently, AUD/USD is trading at 0.7791, down -0.05% on the day, having posted a daily high at 0.7797 and low at 0.7790.

For the Aussie in the recent sessions, the focus went from the big miss in Retail Sales which fell 0.6% vs +0.3% exp to US data that, in stark contrast to that of Australia's, added to the conviction that the Fed is on course to hike again this December and again next year. 

AUD/USD fell below 0.7830 on the retails sales data in Asia and stayed there with some hawkishness in the background by an ex-RBA member.

0.7818 was European am low and where NY opened, 0.7787 was the low (AU-US yield spread tightened sharply), closing at 0/7794.

The US dollar index is up 0.6% on the day, to a two-month high. The US 10yr yields rallied from 2.32% to 2.36 while the Fed fund futures yields hardened slightly to price the chance of a December rate hike at 84%.

The next major risk for the greenback comes with the nonfarm payrolls. 

US employment report preview - Nomura

AUD/USD 1 day: 

Analysts at Westpac noted that a break below 0.7785 would then target 0.7710 (30 June peak), suggesting this is probably dependant on the USD recovering further (for which tonight’s US payrolls data is key).

AUD/USD 1-3 month: 

"If the RBA remains firmly on hold, as we expect, and the US dollar rises on delivery of a Fed interest rate rise in December, then AUD/USD could fall to 0.76 by year-end," the analysts added. 

AUD/USD levels

Valaria Bednarik, chief analyst at FXStreet, explained that the pair is biased lower according to technical readings in the 4 hours chart, as the pair extended lower after breaking below its 20 SMA, now gaining downward strength around 0.7830, while technical indicators head south within negative territory, with a strong downward momentum. 

"A break below the mentioned weekly low should fuel the decline, although a relevant support stands not far below, at 0.7749, March 21st high," Valeria added.