AUD/USD pares early losses on Wall Street rebound, trades around 0.7050

• AUD/USD rebounds after slumping to fresh monthly lows.
• US Dollar Index continues to push higher toward 94.00.
• The upbeat market mood helps AUD stay resilient against USD.

The AUD/USD pair dropped to its lowest level since late September at 0.7010 on Thursday but staged a rebound in the second half of the day supported by risk flows. As of writing, the pair was virtually unchanged on a daily basis at 0.7046.

The broad-based USD strength forced the pair to push lower ahead of the American session. However, the upbeat market mood, as reflected by the decisive rebound witnessed in Wall Street’s main indexes helped the risk-sensitive AUD find demand. At the moment, the S&P 500 Index is up 0.9% on the day. 

Earlier in the day, the US Bureau of Economic Analysis’ first estimate showed that the real Gross Domestic Product (GDP) in the US expanded by 33.1% on a yearly basis in the third quarter. This reading came in higher than the market expectation of 31% and helped market sentiment improve.

DXY extends rally toward 94.00

On the other hand, the US Dollar Index (DXY) continues to push higher amid the heavy selling pressure surrounding the EUR after the European Central Bank announced that it will take policy action in December. With the DXY gaining nearly 0.5% at 93.86, AUD/USD’s upside remains capped for the time being.

In the early trading hours of the Asian session on Friday, Private Sector Credit and Producer Price Index (PPI) data will be featured in the Australian economic docket.

Technical levels to watch for