AUD/USD falls as US Dollar bulls return following NFP data

• The US Dollar firms on easing US-China trade tensions and a better-than-expected NFP report. 
• Nonfarm Payrolls show that 139,000 jobs were added to the US economy in May, above the 130,000 estimate.
• AUD/USD falls after a temporary retest of psychological resistance, which remains intact at 0.6500

The Australian Dollar (AUD) is weakening against the US Dollar (USD) following Friday's Nonfarm Payrolls (NFP) pushed back expectations of a near-term interest rate cut from the Federal Reserve (Fed).

At the time of writing, AUD/USD is trading below 0.6500, a psychological level that continues to provide a firm barrier of resistance for price action.

USD recovers after better-than-expected NFP data eases pressure on the Fed

After a series of US employment data releases warned of a softening in the US labour market, the May NFP report provided some reprieve to investors and policymakers.

The report showed that 139,000 jobs were added to the US economy last month, above analyst expectations of 130,000. The Unemployment Rate remained unchanged at 4.2%, offering relief to the Federal Reserve, which has continued to reiterate a data-dependent stance on monetary policy.

Before Friday's employment data release, the CME FedWatch Tool showed that the probability of a rate cut in July had risen above 30%. However, following the release, expectations for a rate cut in July decreased to 16.% %, reinforcing a potential rate cut in September.

For the AUD/USD pair, interest rate differentials and monetary policy divergence continue to be key drivers of price action. While the Reserve Bank of Australia (RBA) maintains a cautious tone regarding further rate moves, the Fed's continued hawkishness may keep the US Dollar supported in the near term.

Meanwhile, easing US-China tensions, following a phone call between US President Donald Trump and Chinese President Xi Jinping on Thursday, has improved sentiment. However, tariff uncertainty and ongoing trade tensions involving other major partners like India, Canada, and Mexico could still heighten market volatility.