AUD/USD extends rebound, closes in on 0.7200 ahead of US data

• AUD/USD started the new week on a firm footing.
• US Dollar Index edges lower following last week's rally.
• Focus shifts to Markit Manufacturing and Services PMI for US.

After losing more than 200 pips last week, the AUD/USD pair is staging a decisive rebound on Monday and was last seen gaining 0.65% on a daily basis at 0.7180.

AUD ignores disappointing data from Australia

Earlier in the day, the data from Australia revealed that the Commonwealth Bank Services PMI and the Commonwealth Manufacturing PMI declined to 43.3 and 51.7, respectively, in August. Although these figures came in worse than analysts' estimates, the improving market sentiment helped the AUD find demand.

Reflecting the upbeat market mood, the Dow Futures and the S&P Futures both gain around 0.4% ahead of the opening bell.

On the other hand, the US Dollar Index (DXY) is edging lower ahead of mid-tier data releases from the US. Currently, the DXY is losing 0.25% at 93.23.

The IHS Markit will release the preliminary Services and Manufacturing PMI reports for the US later in the day. July Existing Home Sales and the Federal Reserve Bank of Chicago's National Activity Index will also be featured in the US economic docket. 

In case risk flows continue to dominate the financial markets in the second half of the day, AUD/USD is likely to preserve its recovery momentum. There won't be any high-tier data releases from Australia on Tuesday.

Technical levels to watch for