AUD/USD extends higher above 0.74 on latest trade headlines

• US Dollar Index fluctuates sharply after the PCE figures.
• Chinese and American officials are said to meet this week to discuss trade.

The volatility surrounding the AUD/USD pair heightened in the early NA session as investors try to assess the latest headlines on China-U.S. trade relations and the macroeconomic data releases from the U.S. After erasing more than 30 pips and testing the 0.74 handle, the pair gained traction and spiked up to 0.7438 before losing some momentum in the last minutes. As of writing, the pair was trading at 0.7427, adding 0.27% on the day.

The data released by the US Bureau of Economic Analysis on Tuesday revealed that May's core-PCE Price Index was revised down to 1.9% and the June's reading remained unchanged at that level to miss the experts' estimate of 2%. Although the initial reaction to the data weighed on the greenback, an upbeat 0.4% increase in personal spending and personal income figures allowed the US Dollar Index to retrace its daily losses. At the moment, the DXY is up 0.15% on the day at 94.48.

On the other hand, Bloomberg claimed that American officials were going to meet their Chinese counterpart later this week to discuss trade relations and possibly defuse a possible trade war. The aussie reacted positively to this development amid Australia's economic ties with China.

Technical outlook

The pair could encounter the initial resistance at 0.7440 (50-DMA) ahead of 0.7500 (psychological level) and 0.7575 (Jun. 14 high). On the downside, supports could be seen at 0.7410 (20-DMA), 0.7370 (Jul. 26 low) and 0.7315 (Jul. 20 low).