AUD/USD rises to fresh multi-month highs above 0.80 on USD sell-off

• DXY recovery, once again, loses momentum in the NA session.
• AUD/USD rises above 0.80 for the first time since late September.

The AUD/USD gained traction in the US afternoon and broke above the 0.80 mark to refresh its highest level since September 20 at 0.8023. As of writing, the pair was trading a couple of pips below that level, adding 60 pips, or 0.75%, on the day.

The pair's latest upsurge seems to be a product of a recently increasing bearish pressure on the greenback. The sharp drop witnessed in the USD/CAD pair following the Bank of Canada's decision to hike rates by 25 basis points and Governor Poloz's hawkish comments, weighed on the US Dollar Index and triggered a broad-based sell-off. After recovering to 90.50 during the early NA session, the DXY recently broke below the 90 mark to renew its lowest level in more than three years at 89.97. At the moment, the index is down 0.25% at 90.

The next catalyst for the pair will be the employment data from Australia in the Asian session on Thursday. The unemployment rate is expected to stay unchanged at 5.4% in December with the number of employed people estimated to increase by 9K. Although a positive reading is likely to provide an additional boost to the AUD, the pair's overstretched uptrend could have a difficult time extending before a technical correction. On the other hand, a weak reading is likely to cause a sharp drop.

Technical outlook

The next resistance for the pair could be seen at 0.8090 (Sep. 20 high) ahead of 0.8125 (Sep. 8 high) and 0.8200 (psychological level). On the downside, supports are located at 0.7905/0.7900 (Jan. 15 low/psychological level), 0.7845 (20-DMA) and 0.7760 (200-DMA).