AUD/USD falls below 0.6870 as DXY inches closer to 97

• Trade deficit in US narrows more than expected in November.
• US Dollar Index extends correction, closes in on 97.
• Coming up: ISM Non-Manufacturing PMI and Factory Orders from US.

The AUD/USD pair edged lower in the early trading hours of the American session and touched its lowest level in more than two weeks at 0.6865. As of writing, the pair was down 1.05% on the day at 0.6868.

US Dollar Index gains traction

The USD's upbeat performance on Tuesday seems to be keeping the bearish pressure intact. After closing the first day of the week in the negative territory, the US Dollar Index turned north and advanced higher toward the 97 handle. At the moment, the index is up 0.32% on the day at 96.93.

The data published jointly by the US Bureau of Economic Analysis and the US Census Bureau showed that the international trade deficit narrowed to $43.1 billion in November to come in better than the market expectation of $43.8 billion and helped the greenback preserve its strength. Later in the session, the ISM will release the Non-Manufacturing PMI data for December.

Meanwhile, the only data from Australia on Tuesday revealed that ANZ Job Advertisements fell by 6.7% in December after dropping 1.8% in November.

Technical levels to watch for