• AUD/USD drifts lower for the second successive day and hits a fresh weekly low on Friday.
• Worries about a global economic slowdown drive flow away from the risk-sensitive Aussie.
• A positive risk tone undermines the safe-haven USD and helps limit losses for the major.

The AUD/USD pair adds to the previous day's heavy losses and remains under some selling pressure for the second successive day on Friday. The pair maintains its offered tone through the first half of the European session and is currently placed just below the 0.6700 mark, with bears flirting with the 50-day Simple Moving Average (SMA).

Concerns about a global economic slowdown resurfaced on Thursday following the release of the mixed Chinese inflation figures and weaker US labor market report, which, in turn, is seen as a key factor weighing on the risk-sensitive Aussie. The US Dollar (USD), on the other hand, is seen consolidating the previous day's strong gains to over a one-week high and draws some support from a modest uptick in the US Treasury bond yields. This, in turn, exerts additional downward pressure on the AUD/USD pair, though the downside seems limited.

The uncertainty over the Federal Reserve's (Fed) next policy move is holding back the USD bulls from placing aggressive bets. In fact, the US CPI report released earlier this week pointed to signs of easing inflationary pressure and could allow the US central bank to pause its year-long rate-hiking cycle. Investors, however, remain divided over the possibility of rate cuts later this year. This, along with a generally positive tone around the equity markets, keeps a lid on any further gains for the safe-haven buck and lends support to the AUD/USD pair.

Apart from this, the Reserve Bank of Australia's (RBA) hawkish outlook, indicating that some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time, warrants caution for bearish traders. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of this week's rejection slide from the 100-day SMA. Nevertheless, the AUD/USD pair remains on track to end the week in the red and reverse a major part of its gains recorded over the past week or so.

Technical levels to watch