AUD/USD on the back-foot below 0.6900 mark amid escalating US-China tensions

The AUD/USD pair remained on the defensive through the Asian session on Thursday and was last seen trading near the lower end of its daily trading range, just below the 0.6900 mark.

Concerns about a further escalation in the US-China tensions kept a lid on the recent optimism over the global economic recovery from the coronavirus pandemic. This, in turn, drove some heaven flows towards the US dollar and exerted some pressure on the perceived riskier Australian dollar.

Relations between the world's two largest economies soured further after the US suspended passenger flights of four Chinese airlines to and from the United States effective from June 16. The move was in retaliation to China's decision to bar American carriers from re-entering China.

Meanwhile, bullish traders seemed rather unimpressed by Thursday's better-than-expected release of trade balance and monthly retail sales figures from Australia. The AUD/USD pair retreated further from five-month tops set in the previous session, though lacked any strong follow-through.

Investors now await fresh catalyst before positioning for the pair's next leg of a directional move. In the meantime, the latest monetary policy update by the European Central Bank will have its impact on the greenback demand and provide some impetus to the AUD/USD pair.

Apart from this, the release of Initial Weekly Jobless Claims data from the US will also be looked upon to grab some short-term trading opportunities later during the early North American session.

Technical levels to watch