AUD/USD trades within touching distance of multi-month highs near 0.7240

• AUD/USD gained traction after dropping below 0.7200 on Thursday.
• Upbeat market mood helps AUD/USD push higher during American session.
• US Dollar Index loses recovery momentum, retreats below 93.00.

The AUD/USD pair dropped below 0.7200 during the European trading hours but turned north in the second half of the day and came within a touching distance of the 18-month high it set at 0.7243 on Wednesday. As of writing, the pair was up 0.58% on the day at 0.7233.

DXY struggles to stage a convincing rebound

Improving market sentiment on upbeat US data and stimulus hopes weighed on the safe-haven greenback during the American session and helped the pair push higher.

The data published by the US Department of Labor showed that the weekly Initial Jobless Claims declined by 249,000 to 1,186,000 in the week ending August 1st. Meanwhile, US President Donald Trump noted that he instructed his staff to work on an executive order that would allow him to provide a payroll tax cut, eviction protections and unemployment extensions is lawmakers fail to reach an agreement.

The US Dollar Index (DXY), which climbed above 93.00 earlier in the day, lost its traction and was last seen posting modest daily losses at 92.78.

In the early Asian session on Friday, the Reserve Bank of Australia will release its Monetary Policy Statement. Additionally, the AiG’s Performance of Services Index will be featured in the Australian economic docket as well. Later in the day, the US Bureau of Labor Statistics’ closely-watched Nonfarm Payrolls (NFP) report will be the last significant data release of the week.

Technical levels to watch for