AUD/USD bulls are attempting to break higher with eyes towards 0.6680

• AUD/USD bulls eye a break of the H&S resistance.
• US dollar is under pressure in Asia, but bulls are lurking.

AUD/USD bulls are in play as they knock on the doors of a key resistance despite the miss in the Trade Balance.

At the time of writing, AUS/USD is trading close to 0.6510 following a mixed bag in the August trade data:

The surplus came in slightly lower than forecast (A$8.32bn, versus A$10bn expected) due to the stronger than expected import growth at +4%, versus +1% forecast. Exports were also firmer, +3% (+2% forecast), more details to follow on this. 

However, a weaker US dollar in trade on Thursday is giving the commodities a boost. The greenback is correcting the move from Wednesday when the DXY, rallied to 111.735. 

A tear in US yields had helped to prop up the US dollar as the money markets price out overall optimistic speculation over a Federal Reserve pivot. The yield on the US 10-year note was up a high of to 3.78%. The US data went some ways in supporting the greenback as it failed to buttress recent hopes the Fed might adopt a less hawkish policy stance. The September ISM services index showed significant resilience in the face of rapid Fed tightening since March.

''At 56.7, the index rose for the 28th consecutive month and is more or less in line with the 20-year long-run average (57.5). In sum, service sector activity is not yet sufficiently below trend to exert strong downward pressure on inflation. Indicators of price pressures are slowing. The prices component was 68.7 vs 71.5 and the supplier deliveries index eased 0.6 to 53.9. Employment rebounded to 53.0 (+2.8) and new exports rose (+3.2 to 65.1), despite the strength in the US,'' analysts at ANZ Bank explained. 

However, er are seeing a turnaround in flows in Asia on Thursday:

AUD/USD and US dollar technical analysis

The M-formation on the DXY is bullish, but if the index continues lower, then the Aussie will likely benefit significantly and this could be the makings of an inverse head and shoulders breakout to the upside: