AUD/USD pulls away from lows, recovers above 0.71

• AUD/USD refreshes its lowest level since early 2016 below 0.71 on Tuesday.
• Improved market sentiment in the NA session helps the pair retrace its losses.
• Westpac to release Australia Consumer Confidence Index next.

After plummeting to its lowest level in more than two years at 0.7085 earlier in the day, the AUD/USD pair gained traction in the late NA session and recovered a portion of its losses. As of writing, the pair was trading at 0.7103, losing 0.17% on the day.

Developments surrounding the U.S. - China trade conflict seems to be the primary driver of the pair's price action on Tuesday. During the European trading hours, news outlets reported that China asked the World Trade Organization for authorization to impose trade sanctions against the United States to weigh on the trade-sensitive AUD. However, an article published in The Wall Street Journal claimed that Chinese officials were telling American business in China to not to worry about the trade conflict.

Major equity indexes in the U.S., which closed the previous day on a mixed note, gathered strength today with the Dow Jones Industrial Average and the S&P 500 adding 0.5% and 0.35% respectively. The improved market sentiment also allowed the AUD to find demand in the session.

On the other hand, the US Dollar Index is sticking to daily gains above 95.20 and is making difficult for the pair to extends its corrective rise. The next data of importance for the AUD will be Westpac Consumer Confidence, which is scheduled to be released at 00:30 GMT.

Technical levels to consider

Resistances for the pair could be seen at 0.7130 (daily high/Monday high), 0.7190 (Sep. 7 high) and 0.7240 (20-DMA). On the downside, supports are located at 0.7060 (Feb. 12, 2016, low) followed by 0.7000 (psychological level) and 0.6970 (monthly low, Feb. 2016).