AUD/USD recovers to 0.7275 amid US-China trade progress, China PMI eyed

• Bounces-off lows amid US-China trade progress, risk-on market profile.
• But upside appears capped as USD stages a comeback from post-FOMC sell-off.
• Awaits China’s Caixin manufacturing PMI and US payrolls data for fresh cues.

Having retreated from eight-week tops of 0.7296 in the overnight trades, the AUD/USD pair managed to find some fresh buyers near 0.7260 region, as the traders cheered some progress on the US-China trade front while the positive close on the Wall Street also aided the recovery in the higher-yielding Aussie.

China and U.S. trade talks summary and sound bites from two day discussions in Washington

The trade talks between the US President Trump and China’s Vice Premier Liu brought in some positives for the US agricultural sector while the two leaders agree to hold another round of talks later this month to discuss further on the March tariffs deadline.

DJIA stuck at key resistance and confluence level, but enjoys best January since 1989

Meanwhile, the dovish Fed decision continues to bolster the sentiment around the US equity markets, as an era of lower borrowing costs could return, which in turn helps keep the buoyant tone intact around the Aussie dollar.

However, the bulls could find stiff resistance once again near the 0.73 handle, as broad-based US dollar rebound could cap the upside. The greenback staged a solid comeback in the US last session, despite the decline in the Treasury yields, as markets sought to repositioning heading into the crucial US payrolls and earnings data due on the cards later today at 1330 GMT.

In the meantime, the immediate focus now remains on the Chinese Caixin manufacturing PMI report due at 0145 GMT. The manufacturing sector activity in China is expected to contract further to 49.5 in January versus 49.7 last.

AUD/USD Technical Levels