AUD/USD advances to near 0.6880 amid upbeat market mood, more upside seems favored

• AUD/USD is aiming to explore above 0.7000 as risk-on impulse hogs limelight.
• A sheer decline in US Average Hourly Earnings has triggered volatility in the US Dollar Index.
• The Australian Dollar will remain in action ahead of the release of the monthly CPI data and Retail Sales data.

The AUD/USD pair is expected to turn sideways after a juggernaut rally to near the crucial resistance of 0.6880. For further upside, more buying interest will be required from the investing community to push the Australian Dollar above the aforementioned hurdle. Positive market sentiment will continue to provide support to the risk-sensitive currencies.

The risk appetite of investors soared heavily after a downside revision of the Average Hourly Earnings data, released on Friday. Risk-perceived assets like S&P500 witnessed immense buying interest from the market participants as downbeat wage inflation provided the message ‘loud and clear’ that the United States Consumer Price Index (CPI) will continue its downside momentum ahead. Things are falling in place as desired by the Federal Reserve (Fed), therefore the central bank won’t be needed to hike terminal rate projections.

The US Dollar Index (DXY) is expected to re-test its six-month low at around 103.05 amid a soaring market mood. Also, the demand for US government bonds escalated, which led to a decline in 10-year US Treasury yields to 3.56%.

Going forward, the Australian Dollar will remain in action ahead of the release of the monthly CPI data, which is scheduled for Wednesday. As per the consensus, the annual CPI (Nov) will escalate to 7.3% vs. the prior release of 6.9%. Also, the Australian Retail Sales data will hog the limelight, which is seen higher at 0.7% against the former figure of -0.2%.

AUD/USD technical outlook

On a four-hour scale, AUD/USD is hovering around the horizontal resistance plotted from December 13 high around 0.7000. Advancing 20-and50-period Exponential Moving Average (EMAs) at 0.6813 and 0.6790 respectively add to the upside filters.

The Relative Strength Index (RSI) (14) is looking to shift into the bullish range of 60.00-80.00, which will trigger a bullish momentum ahead.