AUD/USD rebounds above 0.7100 as DXY slumps below 94.50

• AUD/USD gains traction amid broad USD weakness in American session.
• US Dollar Index slumps to lowest level since September 2018.
• US PMI data improved in July, fell short of market expectations.

The AUD/USD pair dropped to a daily low of 0.7064 on Friday but gained traction during the American session as the USD came under renewed selling pressure. As of writing, the pair was up 0.12% on a daily basis at 0.7105.

Earlier in the day, the escalating US-Sino geopolitical tensions caused the China-proxy AUD to lose interest. Additionally, the dismal market mood, as reflected by global equity indexes' poor performances, put additional weight on the risk-sensitive AUD's shoulders. 

USD selloff picks up steam

However, the USD failed to capitalize on risk-off flows and started to push lower in the second half of the day. The US Dollar Index, which slumped to its lowest level since September 2018 at 94.41, was last seen losing 0.32% on the day at 94.47.

The preliminary data published by the IHS Markit showed on Friday that the Manufacturing PMI improved to 51.3 but fell short of the market expectation of 51.5. Additionally, the Services PMI arrived at 49.6 to miss analysts' estimate of 51. Finally, the US Census Bureau reported that New Home Sales in June surged by 13.8% but was largely ignored by the market participants.

Meanwhile, Wall Street's main indexes recovered slightly from their opening levels in the last hours to keep the bearish pressure on the USD intact and helped the pair extend its recovery.

Technical levels to watch for