AUD/USD sits comfortably above 0.78, up nearly 250 pips in December

• AUD/USD rises for the eighth straight day on Friday.
• US Dollar Index looks to close the year near 92.
• AUD/USD gains nearly 600 pips in 2017.

After closing the previous four months with losses, the AUD/USD pair remains on track to finish the last month of the year more than 200 pips higher. As of writing, the pair was trading at 0.7814, little below its recently-renewed 2-month high of 0.7824, and adding 0.23% on the day.

The strong performance of commodity-sensitive currencies in the last week of 2017 seems to be the product of investors pricing the expectation of higher commodity prices in 2018 amid a robust global economic expansion. In addition to the AUD, the NZD, the CAD, and the XAU recorded strong gains against the buck as well. Moreover, recent upbeat data from China, Australia's biggest trading partner, has provided an additional boost to the aussie.

On the other hand, the US Dollar Index, which today refreshed its 3-month low below the 92 handle, is now headed for its second straight negative monthly close. Despite the Fed's decision to raise interest rates by 25 bps earlier this month, the USD is having a tough time finding demand as the monetary policy outlook for 2018 remains foggy. Some experts think that the impact of the tax reform on the economy won't be felt in 2018 and the inflation is likely to struggle to reach the 2% target rate.

Technical outlook

The RSI indicator on the daily graph remains above the 70 mark for the third straight day and suggest that the pair could have a difficult time rising further before making a technical correction. On the upside, the initial hurdle could be seen at 0.7825 (daily high) ahead of 0.7885 (Oct. 19 high) and 0.7965 (Sep. 24 high). On the flip side, supports align at 0.7750 (100-DMA), 0.7720 (200-DMA) and 0.7650 (Dec. 21 low).