AUD/USD continues to rally, eyes on 0.8000

• AUD/USD consolidates at the highest level in almost four months. 
• Dollar weakness continues to drive AUD/USD higher. 

The AUD/USD pair consolidated gains during the American session. The Aussie had the best day in weeks and peaked at 0.7977, the highest level since September 22. 

During the US session, the pair remained steady, hovering around 0.7970, headed toward the fourth daily gain in a row. Since December 11 the pair has risen almost 500 pips, boosted by a dollar sell-off. The US Dollar Index dropped today to the lowest in three years. 

Despite extreme readings in short-term technical indicators, no signals of a correction are seen. AUD/USD appears to the headed toward a test of the 0.8000 zone. 

Technical outlook 

“The upside is still favored as in the 4 hours chart, the 20 SMA continues advancing below the current level, now above the 61.8% retracement of the September/December slide, as technical indicators hold flat within extreme overbought territory”, said Valeria Bednarik, Chief Analyst at FXStreet. 

According to her AUD/USD has scope from here to extend its advance up to 0.8000, while steady gains above the level favor a continuation upward toward 0.8124 (2017 high).