AUD/USD climbs above 0.6900 on fresh USD selloff

• AUD/USD gains traction during American trading hours on Monday.
• US Dollar Index extends daily slide toward 97.00.
• Manufacturing and Services PMI data will be released from Australia on Tuesday.

After staying relatively quiet near 0.6880 during the European trading hours, the AUD/USD pair gained traction in the second half of the day and rose to a daily high of 0.6912. Although the pair retreated slightly in the last minutes, it's still up around 0.9% on the day at 0.6895.

DXY erases majority of last week's gains

The selling pressure surrounding the greenback seems to be driving AUD/USD's action in the American session. The US Dollar Index (DXY), which closed the previous week 0.6% higher, turned south on Monday and slumped toward 97.00.

Major equity indexes in the US started the day in the negative territory to reflect a dismal market mood. Lately, the USD has been taking advantage of risk-off flows but the sharp drop witnessed in the US Treasury bond yields seems to be making it hard for it to find demand. At the moment, the 10-year US T-bond yield is down nearly 3% on the day.

In the early Asian session on Tuesday, the Commonwealth Bank's preliminary Manufacturing and Services PMI data from Australia will be looked upon for fresh impetus.

Earlier in the day, the data from the US showed that the Chicago Fed National Activity Index improved to 2.61 in May from -17.89 in April and Existing Home Sales declined by 9.7% in the same period.

Technical levels to watch for