AUD/USD closes Thursday above 0.6850 amid USD weakness

• AUD/USD closed Thursday near 0.6890, recording a 1.47% gain.
• The Aussie held gains despite weak Import and Exports Chinese data reported during the Asian session.
• USD faced severe selling pressure following soft PPI figures.

On Thursday, the AUD/USD tallied a fifth consecutive day of gains and closed near the 0.6890 zone. The broad USD weakness amid dovish bets on the Federal Reserve (Fed) following soft inflation figures allowed the Aussie to gain ground despite weak Trade Balance figures reported from China early in the Asian session.

The Producer Price Index (PPI) from the US from June came in at 0.1% lower than expected at 0.2%, and the Core Figure was 2.4% lower than expected at 2.6%. As a reaction, US Treasury bond yields saw sharp declines across the board, with the 2, 5 and 10-year yields retreating to 4.63%, 3.94% and 3.76%, respectively.

Even though a 25 basis point rate hike is expected at the next FOMC (Federal Open Market Committee) meeting on July 25-26, what is driving the Dollar lower is the belief that it will be the last hike. It's worth noting that several officials deemed “additional” increases necessary but the recent inflation from the US figures released on Wednesday and  Thursday made markets refrain from betting on an additional hike past July.

AUD/USD Levels to watch

The daily chart suggests that the pair’s outlook for the short term is bullish. Indicators hold strong in positive territory, with the Relative Strength Index (RSI) nearing overbought conditions and the Moving Average Convergence Divergence (MACD) printing rising green bars, indicating that the bulls have the upper hand.

Resistance Levels: 0.6900 (June's high), 0.6950,0.6980. 
Support Levels: 0.6785, 0.6750, 0.6715 (20-day Simple Moving Average).