AUD/USD posts fresh highs as trade optimism and economic data boost Aussie

• The US Dollar Index weakens, dropping to 99.40 amid a Taiwan Dollar surge and easing US-China trade concerns.
• The Australian Dollar strengthens, hitting a five-month high near 0.6500, buoyed by the Labor Party's election victory.
• ISM Services PMI rises to 51.6, reflecting positive economic activity in the US service sector.

The AUD/USD pair surged on Monday, reaching a fresh five-month high near the 0.6500 level. The Australian Dollar (AUD) benefits from a range of factors, including the US Dollar's (USD) weakness, a solid economic report from the US and the strengthening of global risk sentiment. 

The Australian Dollar's performance also mirrors broader optimism stemming from the victory of Anthony Albanese's Labor Party in Australia's parliamentary elections, signaling the continuation of stable economic policies. Meanwhile, ongoing trade talks, particularly between the US and China, have contributed to a shift in market sentiment.

Daily digest market movers: ISM boosts service sector, US-China trade talks weigh on USD

• The Labor Party's victory in Australia is seen as positive for the country's economic outlook, though uncertainties linger over US-China trade relations.
• The US Dollar Index (DXY) continues to face downward pressure, primarily due to the ripple effects of a sharp 5% surge in the Taiwan Dollar (TWD). 
• The revaluation of the TWD, which is linked to expectations of a trade deal with the US, has undermined the Greenback, with key currencies like the Japanese Yen (JPY) and the Australian Dollar (AUD) benefiting from this shift. 
• Meanwhile, domestic data such as the ISM Services PMI (51.6) further dampens the bearish mood surrounding the US Dollar, helping to mitigate some of its losses.

Technical Analysis: AUD/USD continues bullish run with positive indicators

The AUD/USD pair is flashing a bullish overall signal, trading around 0.6500, up 0.50% on the day, and sitting mid-range between 0.6434 and 0.6494. The Relative Strength Index (RSI) stands at 62.42, signaling neutral momentum, while the Moving Average Convergence Divergence (MACD) is giving a buy signal. The Stochastic %K reads 78.67, with the Awesome Oscillator at 0.01, both indicating neutral momentum for the time being.

Key moving averages continue to bolster the bullish outlook: the 20-day SMA (0.6344), 100-day SMA (0.6283), and 200-day SMA (0.6461) all suggest a buy signal. Additionally, the 10-day EMA (0.6406) and SMA (0.6404) are both bullish. Support levels are identified at 0.6461, 0.6435, and 0.6411, with resistance at the key psychological level of 0.6500.