AUD/USD sits near multi-month peak, just above 0.7100 mark ahead of US GDP

• AUD/USD retreats a few pips from a fresh multi-month top touched earlier this Thursday.
• A combination of factors helps revive the USD demand and exerts pressure on the major.
• The downside remains cushioned as traders keenly await the Advance US Q4 GDP print.
• US GDP Report Preview

The AUD/USD pair struggles to capitalize on its modest intraday gains and retreats a few pips from the highest level August 11 touched earlier this Thursday. Spot prices, however, manage to hold just above the 0.7100 mark through the first half of the European session and remain at the mercy of the US Dollar price dynamics.

In fact, the USD Index, which tracks the greenback against a basket of currencies, gains some positive traction and recovers from an eight-month low, which, in turn, caps the upside for the AUD/USD pair. A modest uptick in the US Treasury bond yields is seen lending some support to the greenback. Apart from this, a softer tone around the equity markets - amid worries about a deeper global economic downturn - benefits the safe-haven buck and acts as a headwind for the risk-sensitive Aussie.

The intraday USD uptick could also be attributed to some repositioning trade ahead of the Advance US Q4 GDP print, due for release later during the early North American session. That said, the prospects for a less aggressive policy tightening by the Fed should cap the buck. Furthermore, bets for an additional rate hike by the Reserve Bank of Australia (RBA) in February, bolstered by the stronger domestic CPI report on Wednesday, might continue to lend some support to the AUD/USD pair.

The aforementioned fundamental backdrop favours bullish traders and supports prospects for an extension of the recent move-up witnessed over the past month or so. Market participants, however, seem reluctant and prefer to wait on the sidelines ahead of Thursday's important US macro releases - Q4 GDP print, Durable Goods Orders and New Home Sales data. The focus will then shift to the US Core PCE Price Index on Friday, which will influence the Fed's interest rate strategy.

Technical levels to watch