AUD/USD extends gains toward 0.72 on US-China trade headlines

• Trump delays tariff increase in Chinese imports.
• Trade optimism helps antipodeans gather strength on Monday.
• US Dollar Index stays in the red below 96.50.

The AUD/USD pair started the week on a positive note and rose above the 0.7150 area in the early NA session to extend its daily rally to a fresh 5-day high of 0.7185. As of writing, the pair was up 0.65% on the day at 0.7175.

In the early trading hours of the Asian session, U.S. President Trump announced, via Twitter, that he decided to delay the increase in tariffs on Chinese imports that was scheduled for March 1. "Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!" Trump said.

In addition to the rising demand for trade-sensitive currencies such as the AUD and the NZD, the modest selling pressure surrounding the US Dollar Index on Monday provided additional support to the pair. Although there were no fundamental drivers that could have triggered a USD sell-off today, the greenback struggled to find demand after losing 0.5% last week. At the moment, the DXY is down 0.05% on the day at 96.45.

Today's data from the U.S. showed that the business activity in Texas' manufacturing sector expanded at a robust pace in February with the headline general activity index improving to 13.1 from 1 in January. Other data from the U.S. revealed that wholesale inventories increased by 1.1% in December but was largely ignored by the market participants.

Technical levels to consider

The pair could encounter the first resistance at 0.7185 (daily high) ahead of 0.7245 (Feb. 6 high) and 0.7295 (Jan. 31 high). On the downside, supports are located at 0.7145/40 (50-DMA/20-DMA), 0.7070 (Feb. 21 low) and 0.7000 (psychological level).