AUD/USD advances beyond 0.7800 as USD remains on the back foot

• AUD/USD climbed to fresh multi-year highs on Wednesday.
• USD continues to have a tough time attracting investors.
• Focus shifts to key data releases from US and FOMC Minutes.

After spending the Asian session in a tight range below 0.7800, the AUD/USD pair gained traction during the European trading hours and touched its highest level since March 2018 at 0.7820. As of writing, the pair was up 0.7% on the day at 0.7815.

DXY extends slide on Wednesday

The persistent selling pressure surrounding the greenback and the upbeat market mood is helping AUD/USD preserve its bullish momentum mid-week. 

The US Dollar Index (DXY), which closed the previous two days in the negative territory, is currently down 0.21% on the day at 89.25 as investors look for more stimulus with Democrats aiming to retain the majority in the Senate. Reflecting the upbeat mood, major European equity indexes are up between 0.9% and 2.35%, while the 10-year US Treasury bond yield is rising nearly 7%.

Later in the session, ADP Employment Change, Markit Services PMI and Factory Orders data from the US will be looked upon for fresh impetus. Additionally, the FOMC will publish the Minutes of its December meeting. 

Earlier in the day, the data from Australia showed that Commonwealth Bank Services PMI in December declined modestly to 57 to miss the market expectation of 57.4 but was largely ignored by market participants.

Technical levels to watch for