AUD/USD failed to build on the previous day’s solid rebound

The AUD/USD pair edged lower heading into the European session and was last seen hovering near daily lows, just above mid-0.7700s. The pair struggled to capitalize on the previous day's solid rebound of around 85-90 pips from the 0.7700 level and witnessed a modest pullback on the last trading day of the week. Signs of strained relations between China and Australia acted as a headwind for the aussie. It is worth reporting that China on Thursday indefinitely suspended all activity under a China-Australia Strategic Economic Dialogue.

On the other hand, the US dollar found some support from a modest pickup in the US Treasury bond yields. This was seen as another factor that exerted some pressure on the AUD/USD pair. The USD uptick, however, lacked any bullish conviction amid expectations that the Fed will keep interest rates low for a longer period. This, in turn, might help limit any further losses for the major ahead of the US monthly jobs data. The fundamental backdrop points to further near-term USD weakness and favours the AUD/USD bulls. Hence, any subsequent dip might continue to attract some dip-buying near the 0.7700 mark. This should now act as a key pivotal point for short-term traders and help investors to determine the pair's next leg of a directional move.