AUD/USD turns flat on day near 0.6950 ahead of US PMI data

• US Dollar Index slumps below 96.70 on Monday.
• Commonwealth Bank Composite PMI in Australia rose to 49.8 in December.
• Markit's Services PMI in US is expected to come in at 52.2 in final reading.

The AUD/USD pair started the week with a small bearish gap as the escalating conflict between the United States and Iran over the weekend forced investors to flee to safer assets. However, the upbeat PMI data from Australia and the broad USD weakness helped the pair recover its losses. As of writing, the pair was virtually unchanged on the day at 0.6950.

Earlier in the day, the data published by the Commonwealth Bank of Australia showed that the Composite PMI edged higher to 49.6 in December's final reading from 49.4 to help the AUD stay resilient against the USD.

USD loses strength on Monday

In the meantime, the upbeat PMI data releases from the euro area and the UK helped the EUR and the GBP find demand and weighed on the dollar with the US Dollar Index erasing the gains it registered in the second half of the previous week. At the moment, the index is down 0.26% on the day at 96.65.

Later in the session, the IHS Markit's Composite and Services PMI data from the US will be looked upon for fresh impetus. During the Asian session on Tuesday, the ANZ Job Advertisements will be featured in the Australian economic docket.

Technical levels to watch for