AUD/USD holds gains after US S&P PMI data, USD still weak

• The AUD/USD hovers near the 0.6715 level after hiting a daily high of 0.6725.
• The US preliminary S&P PMIs from December came in mixed, with the Service index strong and the manufacturing weak.
• US bond yields continue soft, in multi-month lows.

In Friday’s session, the AUD/USD has seen a modest upside, trading at roughly 0.6715. The pair held its gains after the US reported the preliminary S&P PMIs from December which came in mixed.

In that sense, the US private sector economy, illustrated by the S&P Global Composite PMI, increased to 51.0 from November’s 50.7. Despite the Manufacturing PMI slipping further into contraction at 48.2 from 49.4, the Services PMI had a small rise, reaching 51.3, up from 50.8.

That being said, the outlook is still negative for the Greenback due to the growing dovish bets on the Federal Reserve (Fed) following Wednesday’s decision, which hinted at more easing than expected in 2024. In the meantime, US Treasury yields are trending downwards. The 2-year rate is the only one which edges upwards, currently trading at 4.41%, while the 5-year rate and the 10-year yield saw declines and fell towards 3.90%. This generally weighs negatively on the USD as higher local bond yields typically make the currency gain interest, attracting foreign investors..

AUD/USD levels to watch

The daily chart shows a bullish outlook for the AUD/USD. The Relative Strength Index (RSI) illustrates this trend with its positive territory location and upward incline, indicating a strengthening buying pressure.

Adding to this buying momentum, the Moving Average Convergence Divergence (MACD) shows rising bars in a shade of optimistic green, emphasizing the advantage of the buyers. Moreover, the pair, is comfortably positioned above its 20, 100, and 200-day Simple Moving Averages (SMAs), highlighting the bulls’ assertion to maintain the ongoing bullish trend on the broader scale.

Support Levels: 0.6650, 0.6600 (20-day SMA), 0.6575 (200-day SMA)..
Resistance Levels: 0.6725, 0.6750, 0.6800.

AUD/USD daily chart