AUD/USD bounces off 2-1/2 year lows, turns higher for the second straight session

   •  Quickly reverses a dip to sub-0.7100 level after mixed NAB monthly survey results.
   •  Softer USD tone helps ease the bearish pressure and remains supportive of the uptick.
   •  Escalating US-China trade tensions should keep a lid on any meaningful recovery.

The AUD/USD pair quickly reversed an Asian session dip to sub-0.7100 level and is now headed back towards previous session's swing high.

Against the backdrop of escalating US-China trade tensions, which has been denting sentiment surrounding the China-proxy Australian Dollar, the pair fell an intraday low level of 0.7092 in a knee-jerk reaction to the latest National Australia Bank (NAB) monthly survey results. 

The headline NAB business confidence index hit a 2-year low level of 4 in August, down from previous month's reading of 7. However, business conditions index improved and ticked higher to 15 in August, which extended some support to the domestic currency.

Meanwhile, the US Dollar held on the defensive and further collaborated towards easing the bearish pressure. Adding to this, near-term oversold conditions could also be one of the key factors prompting some short-covering move, helping the pair to rebound around 35-pips from the lowest level since late-Feb. 2016.

Hence, it would be prudent to wait for a strong follow-through buying before confirming that the uptick is backed by some genuine buying and the pair might have bottomed out in the near-term.

Technical levels to watch

Immediate resistance is pegged near the 0.7145-55 region and is followed by the 0.7175-80 supply zone ahead of the 0.7200 handle. On the flip side, sustained weakness below the 0.7100-0.7090 region might turn the pair vulnerable to extend the bearish slide towards challenging the key 0.70 psychological mark.