AUD/USD up-move falters near 0.70 handle, focus remains on US-China trade headlines

The AUD/USD pair climbed to 2-1/2 week tops during the Asian session on Wednesday, albeit seemed struggling to extend the momentum beyond the key 0.70 psychological mark.

The pair built on its recent recovery move from multi-month lows and remained supported by hopes of US-China trade talk progress, especially after the US Treasury Secretary Steven Mnuchin's overnight comments. Speaking to CNBC on Wednesday, Mnuchin was quoted saying that the US-China trade deal was about 90% complete, though the comments were later restated to show that he was using the past tense to describe the progress.

However, the optimism remained intact, rather was fueled further after South China Morning Post reported on Thursday that the US and China have tentatively agreed to another truce and continued underpinning the China-proxy Australian Dollar, though investors remained cautious ahead of Trump-Xi meeting later this week. 

The US President Donald Trump and his Chinese counterpart Xi Jinping are due to meet on the sidelines on the G20 summit in Japan, which will grab all the market attention to see whether the two leaders can pave the way to resolve prolonged trade disputes between the world's two biggest economies.

On the other hand, the US Dollar managed to regain some positive traction on Thursday and further collaborated towards capping any meaningful up-move for the major. Despite Wednesday's disappointing US durable goods orders data, the fact that an agreement between the US and China will ease pressure on the Fed to cut interest rates immediately extended some support to the greenback.

It would now be interesting to see if the pair is able to attract any follow-through buying or witness some long-unwinding trade. The focus now shifts to Thursday's US economic docket - highlighting the release of the final US Q1 GDP growth figures, which might influence the USD price dynamics and contribute towards producing some short-term trading opportunities later during the early North-American session.

Technical levels to watch