AUD / USD recovers modestly from daily lows, hovering around 0.7750

• AUD / USD is still on track to break its two-day winning streak.
• The US Dollar Index clings to daily gains around 89.90.
• Rising US Treasury yields continue to help the USD pick up steam.

The pair AUD/USD It fell to its lowest level in two days at 0.7725 in the early US session on Thursday before entering a consolidation phase. At time of writing, the pair was down 0.63% on the day at 0.7752.

DXY retains its bullish momentum

The market valuation of the USD remains the main deviation of the movements of the AUD / USD. Supported by the strong rally seen in US Treasury yields, the US Dollar Index (DXY) rose to 89.50 on Thursday. After gaining more than 8% on Wednesday, the 10-year US Treasury yield extended its rally and rose to its highest level since March at 1,088%. The upbeat US data appears to have provided an additional boost to the USD as well.

Hours earlier, the ISM reported that the services PMI in December improved to 57.2 from 55.9 in November, showing that economic activity in services continued to expand at a strong pace despite the locks. At the moment, the DXY is up 0.4% to 89.88 and the 10-year Treasury yield is up 3.57% to 1.08%.

There will be no major macro data releases on the Australian economic docket on Friday and the performance of the dollar is likely to continue to weigh on AUD / USD.

Meanwhile, positive risk appetite, as reflected in the impressive gains seen in the major Wall Street indices, is helping the AUD to show some resistance against the USD for the time being. Currently, the S&P 500 Index is trading at new all-time highs above 3,800, up 1.45% on the day.

Technical levels