AUD/USD Rises Above 0.7150 as USD Weakens Amid US Treasury Buybacks

The Australian dollar extended its rebound against the US dollar on Friday, with the session high touching above 0.7150 for the first time since early June, and is now trading near 0.71655, approaching the three-month high around 0.7200. The continued weakness in the US dollar, driven by US Treasury buybacks, has been the core factor supporting the Aussie's strength.

**USD Weakness and the Transmission of US Treasury Buybacks**

The US Treasury's operations to buy back long-term bonds have signaled to the market concerns over elevated yields. Since the outbreak of the US-Iran war, energy prices have remained high, and US yields have been hovering near yearly highs. The buyback measures have pushed yields lower, thereby weighing on the US dollar. According to FXStreet analyst Christian Borjon Valencia, despite the hawkish signals from the July Fed meeting minutes, which hinted at further tightening risks if inflation stalls, the drag from Treasury buybacks on the dollar outweighed this bearish factor, and the Aussie still recorded a gain of over 0.56% on the day.

**Technical Outlook Shows Bullish Bias but Rally Appears Stretched**

On the technical front, AUD/USD has previously climbed above the demand zone at 0.6996, defined by three simple moving averages, as well as the ascending trendline support around 0.6967, with the short-term bias turning constructive. The Relative Strength Index (14) previously stood at 66, indicating solid bullish momentum, but as the price approaches the upper band of the broader uptrend structure, the rally appears increasingly stretched. On the upside, initial resistance is located in the 0.7297-0.7309 range; on the downside, immediate support sits near 0.7127.

**Next Catalysts: Australian Employment Data and US PMI**

Going forward, Australian employment data and US PMI figures will serve as the next catalysts. If Australian jobs data maintain resilience while US data soften, the Aussie could test further upside resistance; conversely, if hawkish Fed expectations re-intensify, the pair may pull back to test support around 0.7127.