AUD/USD retreats modestly from daily tops, stays above 0.7550

• AUD/USD is edging higher following Tuesday's sharp drop.
• US Dollar Index stays in the negative territory ahead of US data.
• Risk flows dominate financial markets in light pre-holiday trading.

The AUD/USD pair staged a rebound on Wednesday after starting the week on the back foot and rose to a daily high of 0.7577 during the European trading hours. Although the pair retreated modestly from this level, it's still up 0.53% on the day at 0.7560.

Earlier in the day, the data published by the Australian Bureau of Statistics showed that Import surged by 11% and Exports increased by 1% in November but these figures had little to no impact on the AUD's performance against its peers. 

DXY rally loses steam on Wednesday

On the other hand, the upbeat market mood ahead of the Christmas holiday is making it difficult for the greenback to find demand. Reflecting the lack of interest for the safe-haven USD, the US Dollar Index is down 0.22% on the day at 90.45. Pfizer and BioNTech announced on Wednesday that the US government will purchase 100 million additional doses of the COVID-19 vaccine and this headline seems to have provided a boost to sentiment in the absence of significant fundamental drivers. 

Later in the session, the US Bureau of Economic Analysis will release the Personal Spending and Personal Income data alongside the US Department of Labor's weekly Initial Jobless Claims report. Other data featured in the US economic docket will include New Home Sales, Durable Goods Orders and the University of Michigan's Consumer Sentiment Index.

In the meantime, US stocks index futures trade in the positive territory ahead of the opening bell, suggesting that risk flows are likely to remain in control of markets and allow AUD/USD to stay in the green.

Technical levels to watch for