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  • Falling copper prices and weaker CNY weigh on the AUD on Monday.
  • US Dollar Index records modest recovery gains following Friday’s sharp fall.

After staying quiet above the 0.74 handle during the Asian and the European session, the AUD/USD pair turned south in the NA session and dropped to a daily low at 0.7372 before going into a consolidation phase in the last couple of hours. As of writing, the pair was trading at 0.7380, losing 0.55%, or 40 pips, on the day.

On Monday, the USD/CNY pair edged higher toward the 12-month high that it recorded last Thursday at 6.8155 to reflect a weaker CNY. Similar to what we have seen last week, the CNY’s market valuation impacted the AUD’s price action due to the fact that China is Australia’s biggest trading partner. At the moment, the USD/CNY is up 0.33% on the day at 6.7930. Furthermore, copper futures lost 0.6% on the day to further weigh on the commodity-sensitive AUD.

On the other hand, the greenback seemed like it was able to find enough demand to start shaking off the negative effects of President Trump’s comments from Friday. The US Dollar Index was last seen up 0.2% on the day at 94.70. Reports of White House officials giving hints about an upbeat GDP reading on Friday ignited rumors of Trump leaking information about growth figures and provided an additional boost to the buck.

There won’t be any macroeconomic data releases from Australia on Tuesday and the DXY is likely to continue to be the primary driver of the pair’s price action. The economic docket in the U.S. will feature Markit’s manufacturing & service sector PMI figures and Richmond Fed’s Manufacturing Index.

Technical levels to consider

The pair could encounter the first support at  0.7345 (Jul. 17 low) ahead of 0.7315 (Jul. 20 low) and 0.7265 (Dec. 16, 2016, low). On the upside, resistances align at 0.7400 (psychological level/20-DMA), 0.7460 (50-DMA), and 0.7500 (psychological level).