AUD/USD climbs above 0.7000 as DXY tumbles below 106.00, US PCE buzz

• AUD/USD has overstepped the psychological resistance of 0.7000 amid a weaker DXY.
• The DXY has printed a fresh three-week low of 105.84 as the US economy has contracted consecutively.
• A third consecutive 50 bps rate hike is expected by the RBA next week.

The AUD/USD pair has surpassed the psychological resistance of 0.7000 firmly and has printed an intraday high of 0.7015 in the Tokyo session. The asset has witnessed some significant bids as the US dollar index (DXY) has broken the five-day support of 106.00.

The DXY has printed a fresh three-week low of 105.84 and is likely to display more weakness as a consecutive contraction in the US economy has forced investors to dump the asset.

On Thursday, the US Bureau of Economic Analysis reported the annual Gross Domestic Product (GDP) at -0.9%, improved from the prior contraction of -1.6% but lower than the expectations of 0.5%. This has renewed the recession fears in the US economy.

A contraction in economic activities in times when Federal Reserve (Fed) policymakers are busy fighting the accelerating price pressures is going to dampen street behavior.

In today’s session, investors will keep an eye on US Personal Consumption Expenditure (PCE) data, which is seen at 6.7%, higher than the prior print of 6.3%. This will lead to more policy tightening measures by the Fed.

On the aussie front, investors are awaiting the announcement of the interest rate decision by the Reserve Bank of Australia (RBA), which is due on Tuesday. As per the Reuters poll, RBA Governor Philip Lowe may dictate a third consecutive rate hike by 50 basis points (bps).