• AUD/USD struggles to capitalize on its modest intraday gains to the 0.6425-30 area on Friday.
• China’s economic woes continue to act as a headwind for the Aussie despite stimulus talks.
• The Fed’s hawkish outlook underpins the USD and contributes to keeping a lid on the major.

The AUD/USD pair surrenders its modest intraday gains to the 0.6425-0.6430 region and hovers near the lower end of its daily range during the early European session on Friday. Spot prices currently trade around the 0.6400 round-figure mark and remain well within the striking distance of the lowest level since November 2022 touched the previous day.

Despite talks of additional Chinese stimulus measures, concerns about the worsening economic conditions in the world's second-largest economy continue to act as a headwind for antipodean currencies, including the Australian Dollar (AUD). The fears were fueled by the fact that China Evergrande Group – one of the country's biggest real estate developers – has filed for protection from creditors in a US bankruptcy court. This adds to worries about a deepening crisis in China's property sector and keeps a lid on the AUD/USD pair's modest intraday uptick.

Apart from this, the disappointing domestic jobs data on Thursday pretty much confirms another on-hold rate decision by the Reserve Bank of Australia (RBA) in September and continues to undermine the Aussie. The US Dollar (USD), on the other hand, reverses a modest intraday dip and stands tall near its highest level in more than two months in the wake of firming expectations that the Federal Reserve (Fed) will keep interest rates higher for longer. This further contributes to keeping a lid on any meaningful upside for the AUD/USD pair.

That said, the Relative Strength Index (RSI) on the daily chart is already flashing oversold conditions and holding back traders from positioning for any further losses in the absence of any relevant economic data from the US. Nevertheless, the fundamental backdrop seems tilted firmly in favour of bearish traders and suggests that the path of least resistance for the AUD/USD pair is to the downside.

Technical levels to watch