AUD/USD drops to 0.7030 area as USD starts to gather strength

• AUD/USD struggles to stage a convincing recovery on Friday.
• US Dollar Index rose above 94.50 ahead of American session.
• Risk-aversion helps greenback find demand as a safe-haven.

The AUD/USD pair closed the first four days of the week in the negative territory. Although the pair staged a rebound and rose to a daily high of 0.7086 on Friday, it reversed its course on broad-based USD strength and was last seen losing 0.2% on the day at 0.7030.

USD capitalizes on safe-haven flows

On Thursday, a decisive recovery witnessed in Wall Street’s main indexes in the second half of the session made it difficult for the safe-haven greenback to continue to outperform its rivals.

However, the risk-off market environment, as reflected by the sharp decline seen in European stocks, is helping the US Dollar Index (DXY) push higher on Friday. Confirming the dismal mood, the S&P 500 futures are down 0.8% on the day. At the moment, the DXY is gaining 0.26% at 94.58.

Later in the day, Durable Goods Orders for August will be the only data featured in the US economic docket. Unless there is a large divergence between the actual print and the market consensus of 1.5%, the risk perception is likely to remain the primary driver of AUD/USD’s action.

New York Federal Reserve President John Williams is scheduled to deliver a speech at 1910 GMT as well.

Technical levels to watch for