AUD/USD slips back closer to 30-month lows, around 0.7100 handle

   •  Escalating US-China trade tensions kept a lid on any meaningful recovery attempt.
   •  Resurgent USD demand/risk-off mood further dent the already weaker sentiment.

The AUD/USD pair continued with its struggle to register any meaningful recovery and remains within striking distance of 30-month lows, set in the previous session.

The pair did manage to stage a modest recovery on Tuesday but once again failed to make it through the 0.7130 supply zone and was being capped by worries over escalating trade tensions between the world's two largest economies. 

In the latest addition to the ongoing US-China trade spat, China is said to seek permission from the WTO to impose sanctions on the US dented market sentiment, which was seen as one of the key factors weighing on the China-proxy Australian Dollar. 

Meanwhile, the prevalent risk-off mood was further seen benefitting the US Dollar's safe-haven status and driving flows away from perceived riskier currencies - like the Aussie. The USD buying seems to have picked up the pace in the last hour or so and added to the already weaker sentiment surrounding the major. 

Bulls were now seen trying hard to defend the 0.7100 handle, which if broken decisively should pave the way for an extension of the pair's well-established near-term bearish trajectory. Market participants now look forward to the release of the latest US PPI figures for some fresh impetus later during the early North-American session.

Technical levels to watch

A follow-through weakness below 0.7085 level (30-month low) is likely to accelerate the fall towards 0.7050 intermediate support before the pair eventually drops to challenge the key 0.70 psychological mark.

On the flip side, the 0.7130 region now seems to have emerged as an immediate strong hurdle, above which a bout of short-covering could lift the pair towards 0.7165-70 supply zone en-route the 0.7200 handle.