AUD/USD gained strong upside momentum and is trying to settle above the resistance at 0.7800.
Australian Dollar Continues To Move Higher Against U.S. Dollar
AUD/USD is currently trying to settle above 0.7800 while the U.S. dollar remains under significant pressure against a broad basket of currencies.
The U.S. Dollar Index declined below the support at 89.40 and is slowly moving towards the next support level at 89. Foreign exchange market traders are selling the American currency on expectations that Democrats will win both seats in the Georgia elections and take control of the Senate. This scenario is bearish for the U.S. dollar because Democrats’ control of the Senate will lead to additional stimulus.
The U.S. bond market shows strong reaction, and the 10-year bond yield has finally managed to get above 1.00%. The sell-off in bonds, which pushes their yields up, shows that traders are trying to price in the risk of additional stimulus so the U.S. dollar may soon develop additional downside momentum. The Australian dollar is also supported by the recent rally in the oil market which boosted commodity-related currencies.
Today, Australia reported that Services PMI increased from 55.1 in November to 57.0 in December compared to analyst consensus of 57.4. Later, traders will have a chance to evaluate the final reading of the U.S. Services PMI which is projected to decline from 58.4 to 55.3. In addition, the U.S. will release ADP Employment Change report which is expected to show that private businesses hired 88,000 workers in December.
AUD/USD managed to settle above the resistance level at 0.7760 and is trying to settle above the next resistance at 0.7800. RSI is in the overbought territory and the risks of a pullback are significant.
If AUD/USD settles above the resistance at 0.7800, it will head towards the next resistance level at 0.7840. A move above this level will open the way to the test of the next resistance at 0.7870.
On the support side, a move below 0.7800 will push AUD/USD towards the support level at 0.7760. In case AUD/USD declines below 0.7760, it will head towards the support at 0.7740.