AUD/USD rises to test 0.7230 as US dollar slides

• A weaker US Dollar pushed AUD/USD to test daily highs at 0.7230. 
• Greenback accelerated the decline during the US session despite higher US yields. 

The AUD/SUD pair gained momentum on the back of a weaker US dollar across the board and rose to test daily highs around the 0.7230 area. The pair was unable to break above and pulled back modestly. It is trading at 0.7220, up 25 pips for the day, holding a bullish tone but limited while below 0.7240/30. 

During the Asian session, the pair rose on the back of some optimism over US-China trade deals. Then it pulled back on European hours finding support above 0.7200. US CPI data weakened the greenback, particularity against European currencies and boosted AUD/SUD to test daily highs. 

The US dollar index dropped below 97.00 after trading yesterday at the highest level in two weeks. Most of the losses in the index came from the rally in EUR/USD and GBP/USD. 

Technical levels to watch

To the upside, above daily highs there is resistance area at 0.7240, a consolidation on top would open the doors to further gains with a potential target slightly below 0.7260. If the pair keeps rising attention would turn to 0.7290/95, the barrier that protects 0.7300. 

On the flip side, a slide below 0.7210 would clear the way for a test of 0.7200 (daily low). Short-term support levels below are seen at 0.7190 (Dec 6 low) and 0.7175.