AUD/USD climbs higher toward 0.72 on US-China trade optimism

After spending the majority of the day in a tight range above the 0.71 mark following the modest sell-off witnessed in the Asian session, the AUD/USD pair gained traction in the late NA session and rose to a fresh session high of 0.7175. As of writing, the pair was adding 0.6%, or 42 pips, on the day at 0.7170.

Earlier today, the RBA in its February meeting minutes noted that members agreed that there was not a strong case for a near-term adjustment in the monetary policy. "Rather, they assessed that it would be appropriate to hold the cash rate steady and for the Bank to be a source of stability and confidence while further progress unfolds," the RBA added to confirm its shift to a neutral stance and weighed on the AUD.

With the US dollar coming under selling pressure in the second half of the day and the antipodeans finding demand on hopes of this weeks trade talks in Washington bringing sides closer to a final deal, the pair reversed its course and rose sharply. Bloomberg on Tuesday reported that the U.S. was seeking stable yuan pledge as part of the trade deal with China, sending the USD/CNY pair to its lowest level in two weeks. 

On the other hand, since failing to make a decisive recovery above 97, the US Dollar Index continued to push lower pressured by the falling T-bond yields. At the moment, the DXY is down *33% on the day at 96.45.

Technical levels to consider

The pair could face the initial support at 0.7155 (20-DMA) ahead of 0.7100 (daily low) and 0.7050 (Feb. 12 low). On the upsşde, resistances are located at 0.7200 (psychological level), 0.7245 (Feb. 6 high) and 0.7295 (Jan. 31 high).