• AUD/USD witnesses some selling on Friday and snaps a two-day winning streak.
• The emergence of some USD selling exerts some downward pressure on the pair.
• Recession fears, geopolitical tensions further weigh on the risk-sensitive aussie.
• The downside seems cushioned as the focus remains glued to the US NFP report.

The AUD/USD pair struggles to capitalize on its two-day-old recovery move from its lowest level since July 25 and edges lower on Friday. The pair remains on the defensive through the first half of the European session and is currently placed near the daily low, around the 0.6950-0.6945 region.

The US dollar regains some positive traction on the last day of the week, which turns out to be a key factor exerting downward pressure on the AUD/USD pair. Against the backdrop of growing recession fears, heightened geopolitical tensions after US House Speaker Nancy Pelosi's Taiwan visit, offer some support to the safe-haven greenback.

In fact, China on Thursday said that it conducted “precision missile strikes” in the Taiwan Strait as part of military exercises. The five missiles fired by China landed within Japan's exclusive economic zone and raises tensions in the region. Furthermore, China said that it will sanction Pelosi and bar her from entering the country.

Apart from this, an uptick in the US Treasury bond yields offers additional support to the buck amid some repositioning trade ahead of the key data risk. The closely-watched US monthly jobs report - popularly known as NFP - is scheduled for release later during the early North American session and would influence the USD price dynamics.

Against the backdrop of more hawkish remarks by several Fed officials this week, stronger US data would revive bets for a large rate hike move at the September FOMC meeting. This would be enough to boost the USD. Conversely, any disappointment would further fuel recession fears and act as a tailwind for the safe-haven buck. This, in turn, suggest that the path of least resistance for the AUD/USD pair is to the downside.

Technical levels to watch