AUD/USD extends daily rebound beyond 0.7060 supported by risk flows

• AUD/USD is staging a technical correction on Monday.
• Upbeat market mood helps AUD gather strength at the start of the week.
• US Dollar Index drops toward 94.20 ahead of the American session.

The AUD/USD pair closed the previous six trading days in the negative territory but started to erase its losses on Monday. As of writing, the pair was up 0.58% on a daily basis at 0.7067.

Over the weekend, the data from China showed that industrial profits grew by 19.1% on a yearly basis in August and helped the China-proxy AUD start the week on a strong footing.

USD weakens as markets turn risk-positive

Meanwhile, the upbeat market mood, as reflected by rising global equity indexes, made it difficult for the safe-haven USD to preserve its strength against its rivals. After gaining more than 1.5% last week, the US Dollar Index edged lower on Monday and was last seen losing 0.4% on a daily basis at 94.20.

In the second half of the day, the Federal Reserve Bank of Dallas' Manufacturing Business Index will be the only macroeconomic data release from the US.

Meanwhile, the S&P 500 futures are up more than 1% on Monday, suggesting that Wall Street's main indexes are likely to open decisively higher. A stock market rally in the US could put additional weight on the greenback's shoulders during the American session and help AUD/USD edge higher.

Technical levels to watch for