AUD/USD stages modest recovery, trades near 0.7060

• US-China trade headlines help AUD rebound.
• US Dollar Index clings to daily gains, looks to snap 4-day losing streak.

The AUD/USD pair erased a large part of this week’s gains on Thursday and dropped to a daily low of 0.7040 before staging a technical recovery in the NA session. As of writing, the pair was trading at 0.7063, losing 0.4% on a daily basis.

Earlier today, the data from China showed that industrial production expanded by 5.3% on a yearly basis in January to fall short of the market expectation of 5.5% and hurt the AUD due to Australia’s  tight economic ties to China. Furthermore, reports of the U.S. planning to postpone the Trump-Xi summit to the end of April further weighed on the trade-sensitive AUD.

On the other hand, the greenback outperformed its rivals after spending the first half of the week under pressure and dragged the pair lower. The US Dollar Index, which slumped to a 10-day low of 96.39 yesterday, climbed above the 96.50 handle and was last seen adding 0.33% on the day at 96.80.  

Despite the greenback strength, however, the pair pulled away from daily lows in the last couple of hours as the latest headlines on China-U.S. trade conflict suggesting that Chinese negotiators were looking to secure a trade deal before President Xi travelled to the U.S. improved the market sentiment.

Technical levels to consider