AUD/USD closes in on multi-year highs, trades around 0.7740

• AUD/USD is edging higher at the start of the week.
• USD selloff remains intact ahead of PMI data from the US.
• Wall Street looks to extend rally on the first trading day of 2021.

The AUD/USD pair gained more than 100 pips in the last week of 2020 and preserves its bullish momentum on Monday. As of writing, the pair was trading a little below the multi-year high it set at 0.7743 and was up 0.42% on a daily basis.

DXY remains on the back foot

During the Asian trading hours, the data from Australia showed that the Commonwealth Bank Manufacturing PMI edged slightly lower to 55.7 in December. Although this reading fell short of the market expectation of 56, it has little to no impact on the AUD’s performance against its rivals.

On the other hand, the selling pressure surrounding the greenback remains intact at the start of the new week. The US Dollar Index (DXY) registered its lowest weekly close since April 2018 at 89.93 and extended its slide in the absence of significant fundamental drivers that can help the USD recover its losses. At the moment, the DXY is down 0.52% at 89.46.

In the second half of the day, the IHS Markit will release the December Manufacturing PMI for the US. 

Meanwhile, major equity indexes remain on track to open decisively higher with the S&P 500 Futures rising more than 0.5% ahead of the opening bell. A bullish rally in US stocks could put the greenback under additional bearish pressure and help AUD/USD push higher in the second half of the day.

Technical levels to watch for