AUD/USD recovers further from multi-week lows, still below 0.6800 handle

• AUD/USD finds some support ahead of mid-0.6700s and gains some traction.
• US-China trade uncertainty is likely to keep a lid on the China-proxy Aussie.

The AUD/USD pair gained some positive traction on the last day of the week and recovered farther from six-week lows set in the previous session.

With investors still digesting a fresh escalation in tensions between the world's two largest economies, a subdued US dollar demand helped the pair to stall its recent downward trajectory and find some support ahead of mid-0.6700s.

Focus remains on trade developments

It is worth recalling that the US President Donald Trump approved two bills supporting Hong Kong’s pro-democracy demonstrators, which raised scepticism over a possible "phase one" trade deal between the US and China.

However, the market reaction has been limited so far and in absence of any fresh headlines, traders now seemed inclined to lighten their bearish bets, which seemed to be the only factor lending some support to the China-proxy Aussie.

Meanwhile, the uptick seemed to lack any bullish conviction and is more likely to remain capped amid relatively thin liquidity conditions and absent relevant market-moving US economic releases on the last trading day of the week.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the pair might have bottomed out in the near-term and positioning for any further near-term appreciating move beyond the 0.6800 handle.

Technical levels to watch