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  • US Dollar Index drops further, down by 0.60% to lowest since 2018.
  • AUD/USD heads for the highest close since July 2018.

The AUD/USD broke above 0.7435 and climbed to 0.7449, reaching the highest level in two years. The combination of a weaker US dollar and risk appetite is boosting the pair that is rising for the third day in a row.

Dollar down, down

The greenback continues to be under pressure across the board as equity prices in Wall Street gain momentum. The Dow Jones is up by 0.55% above 30,000 and the Nasdaq by 0.45%. The DXY reached a fresh multi-year low at 90.48.

Economic data from the US came in mixed. Initial and continuing jobless claims dropped more than expected, and the Markit Service PMI hit the highest in five years while the ISM Service sector index dropped to the lowest in six months. The numbers have no impact on the market. Traders are looking at conversations between US lawmakers for another fiscal stimulus.

The risk-on mood continues to prevail in financial markets supporting the AUD/USD. The optimism about a COVID-19 vaccine is offsetting the record cases in the US and the announcement of more restrictions in Europe. A sign of caution could be seen in crosses like EUR/AUD and GBP/AUD that remain sideways.

Technical levels