AUD / USD approaches 0.7700 as USD continues to gain strength ahead of the weekend

• AUD / USD is losing more than 2% on Friday.
• The US dollar index continues to rise as Treasury yields recover from daily lows.
• The core US PCE price index was unchanged at 1.5% in January.

After recovering towards 0.7800 in the first US session, the pair AUD/USD it lost its traction and fell to its lowest level in more than two weeks at 0.7711. At time of writing, the pair was down 2.01% on the day at 0.7715.

DXY extends rally to 91.00

The constant strength of the USD continues to weigh on the AUD / USD ahead of the weekend. Although the US Dollar Index (DXY) erased a portion of its daily gains earlier in the day with US Treasury yields making a deep correction, it reversed its direction and jumped to its highest level in a week at 90.82.

An observed rally in Treasury yields appears to be providing a boost to the USD. Currently, the performance of the 10-year benchmark, which lost up to 4% earlier in the day, is down 1.8% and the DXY is up 0.75% to 90.80.

Data released by the U.S. Bureau of Economic Analysis on Friday showed that the Basic Personal Consumption Spending (PCE) Price Index, the Fed’s preferred indicator of inflation, was unchanged at 1.5% year-on-year in January. However, this reading did not elicit a significant market reaction.

Other data showed that personal income and personal expenses increased 10% and 2.4%, respectively. Finally, the University of Michigan consumer sentiment index hit 76.8 in February’s final reading, compared with analysts’ estimate of 76.5.

Technical levels