AUD/USD eases off multi month highs, stays above 0.78

• USD weakness remains the main theme in FX space.
• AUD/USD starts the year on a positive note.
• Manufacturing PMI from the U.S. is up next.

After ending the last month of 2017 with a gain of nearly 250 pips, the AUD/USD pair continued to push higher on Tuesday and reached its best level since October 20 at 0.7844 before retracing a portion of its daily advance. As of writing, the pair was trading at 0.7820, up 0.2%, or 15 pips, on the day.

The pair's upsurge today seems to be a product of a broad-based USD weakness. The US Dollar Index, which recorded monthly losses in November and December, remained under pressure and faltered to its worst level in more than three months at 91.47. After finding support at that level, the index is staging a modest recovery ahead of the Markit Manufacturing PMI release from the United States. At the moment, the index is at 91.58, still down 0.45% on the day.

Later in the Asian session, the Housing Industry Association is going to publish New Home Sales figures, which will be the only macroeconomic data release from Australia this week. Meanwhile, investors will be getting ready for Friday's critical employment report from the United States.

Technical outlook

The RSI indicator on the daily chart remains above the 70 mark for the fifth day in a row today, suggesting that a technical slide is imminent before the pair gathers further bullish momentum. The pair could face the initial resistance at 0.7885 (Oct. 19 high) ahead of 0.7965 (Sep. 24 high) and 0.8000 (psychological level). On the flip side, supports are located at 0.7785 (Dec. 29 low), 0.7730 (200-DMA) and 0.7650 (Dec. 21 low).