AUD/USD sticks to daily gains above 0.7150 into Asian session

• US-China trade headlines help AUD gather strength on Monday.
• US Dollar Index struggles to rebound.

Fueled by the U.S. President Trump’s comments above the progress in the U.S.-China trade talks, the AUD/USD pair started the week on a positive note and rose to a daily high of 0.7185. With the market action turning subdued in the second half of the NA session, the pair has gone into a consolidation phase and was last seen trading at 0.7170, adding 0.6% on a daily basis.

Earlier in the day, Donald Trump said that the U.S. had made ‘substantial progress’ in trade negotiations with China and announced that he decided to delay the increase in tariffs imposed on Chinese imports to provide the initial boost to the AUD, which is sensitive to trade headlines due to the tight economic ties between China and Australia. “China Trade Deal (and more) in advanced stages. Relationship between our two Countries is very strong. I have therefore agreed to delay U.S. tariff hikes. Let’s see what happens?” Trump tweeted out in the last hour to highlight the optimism in trade talks.

On the other hand, despite today’s mixed macroeconomic data releases from the U.S.,  the US Dollar Index took advantage of the rising T-bond yields and limited its losses to cause the pair to lose its bullish momentum. Toward the end of the day, the DXY was virtually unchanged on the day a little below 96.50.

Technical outlook by FXStreet Chief Analyst Valeria Bednarik

Short-term, and according to the 4 hours chart, the pair seems poised to extend its advance, now developing above all of its moving averages which are losing the bearish strength seen on previous updates, as technical  indicators  hold on to daily gains near overbought readings, although now without directional strength. The pair has some relevant intraday highs in the 0.7080 price zone, now the immediate resistance, ahead of 0.7206, the high set last week. Beyond this last, the pair could extend its advance up to   0.7250 a strong long-term static resistance area.

 Support levels: 0.7130 0.7100 0.7070

Resistance levels: 0.7180 0.7210 0.7250