AUD/USD advances above 0.7860 ahead of US PMI data

• AUD/USD extends the daily rally to fresh multi-year lows.
• US Dollar Index stays deep in the negative territory around 90.30.
• Eyes on IHS Markit's February Manufacturing and Services PMI data. 

The AUD/USD pair extended its daily rally in the early American session on Friday and touched its highest level in 35 months at 0.7867. As of writing, the pair was up 1.15% on a daily basis at 0.7857.

DXY selloff fuels AUD/USD's upside

The unabated selling pressure surrounding the USD is allowing AUD/USD to preserve its bullish momentum ahead of the weekend. After losing 0.4% on Thursday, the US Dollar Index is losing 0.3% at 90.30 on Friday. In the meantime, the S&P 500 Futures are up 0.42%, suggesting that risk flows are likely to remain in control of financial markets and make it tough for the USD to stage a recovery in the second half of the day.

Later in the session, the IHS Markit will release February's preliminary Services and Manufacturing PMI reports for the US. Additionally, January Existing Home Sales will be looked upon for fresh impetus.

The only data from Australia revealed that Retail Sales in January rose at a softer pace than expected but this reading had little to no impact on the AUD's performance against its rivals.

Technical levels to watch for