AUD/USD climbs to daily highs near 0.7070 ahead of US data

• AUD/USD slumps to lowest level in more than 2-years on Thursday.
• USD weakness allows the pair to recover on Friday.
• US Dollar Index extends decline toward 96.

The risk-off mood and the negative market surrounding commodities and related currencies weighed on the AUD/USD pair and forced it to plummet to its lowest level since February of 2016 at 0.7015. However, with the market sentiment improving slightly and the greenback continuing to weaken against its peers, the pair reversed its course and recovered a majority of yesterday’s losses. As of writing, the pair was trading at 0.7066, adding 0.48% on a daily basis.

The dismal performance of the U.S. Treasury bond yields and concerns over the potential negative impact of the Fed’s monetary policy on the economic growth caused the US Dollar Index to lose its traction and pull away from the 97 handle. Ahead of the housing and trade balance  data from the U.S., the index is losing 0.35% on the day at 96.23.

In the meantime, with investors getting ready for the New Year break, the trading conditions are likely to remain thin at least until January 2nd.  

Technical levels to consider