AUD/USD erases portion of daily losses, steadies above 0.7100
- AUD/USD staged a rebound after falling below 0.7100.
- US Dollar Index slumps to lowest level since September 2018.
- Focus shifts to Commonwealth Bank's PMI data for Australia.
The AUD/USD pair staged a deep correction on Thursday following the impressive rally witnessed during the first half of the year. After dropping below 0.7100, however, the pair started to recover its losses as the greenback came under renewed selling pressure. As of writing, AUD/USD was trading at 0.7127, still down 0.15% on a daily basis.
DXY fails to make a convincing recovery
Earlier in the day, the cautious market mood and the worse-than-expected Initial Jobless Claims data from the US helped the USD gather strength as a safe-haven.
The US Dollar Index (DXY) rose toward 95.20 in the early American session after the US Department of Labor reported that the number of Americans who applied for unemployment benefits increased for the first time in 15 weeks. Moreover, US Treasury Secretary Mnuchin announced that they will not be including the payroll tax cut in the upcoming coronavirus relief bill.
Nevertheless, the DXY's recovery remained short-lived despite falling US stocks and the index broke below 95.00 to touch its lowest level since September 2018 at 94.59. At the moment, the DXY is down 0.32% on the day at 94.66, helping the pair stay above 0.7100.
In the early trading hours of the Asian session on Friday, the Commonwealth Bank's preliminary Manufacturing and Services PMI data for Australia will be looked upon for fresh impetus.
Technical levels to watch for