AUD/USD jumps to over two-month highs, near mid-0.7800s

   •  Upbeat Chinese PMI print extends initial support.
   •  Sliding US bond yields provided an additional boost.
   •  Remains poised to extend the bullish momentum.

The AUD/USD pair continued gaining positive traction at the start of 2018 and is currently placed at over two-month highs, around the 0.7840-45 region.

The pair quickly reversed an early Asian session dip to sub-0.7800 level and built on its bullish momentum, witnessed over the past three weeks. Today's release of better-than-expected Chinese Caixin manufacturing PMI print extended some initial support to the China-proxy Australian Dollar.

Adding to this, a sharp retracement in the US Treasury bond yields, which exerted some additional downward pressure on the already weaker US Dollar, was also seen benefitting higher-yielding currencies - like the Aussie.

Meanwhile, rising commodity prices, led by solid gains in iron ore, copper and gold helped underpin the commodity-linked currency and further collaborated to the pair's strong up-move to its highest level since Oct. 20. 

In absence of any major market moving economic releases, a follow-through momentum, supported by technical buying following last week's bullish break through 100-day SMA barrier, now looks a distinct possibility.

Technical levels to watch

Momentum beyond mid-0.7800s is likely to get extended towards 0.7875-80 supply zone en-route the 0.7900 handle. On the flip side, 0.7820 level, followed by the 0.7800 mark now seems to protect the immediate downside, which if broken could drag the pair back towards 100-day SMA resistance-turned-support near the 0.7780-75 region.