AUD/USD extends slide below 0.71 as US Dollar Index advances toward 97 area

• US Dollar Index gains traction in the NA session.
• Disappointing data from China and dovish RBNZ announcements weigh on the AUD.
• The U.S. trade deficit drops more than expected in January.

The AUD/USD pair came under a strong bearish pressure during the Asian session on Wednesday and dropped to 0.71 area. After spending the majority of the European session consolidating its losses, the pair turned south, once again, and slumped to a daily low of 0.7080, where it was down 0.75% on a daily basis.

Earlier today, the data from China showed that industrial profits recorded the worst contraction in more than 7 years, -14%, to remind investors of the economic slowdown in the world's second-biggest economy. Commenting on the data, "Weaker profits will likely weigh on investment decisions and growth, while worsening the credit profiles of manufacturers. It may also spur the authorities into hastening infrastructure spending and targetted easing,” TD Securities analysts argued.

Moreover, the RBNZ's dovish shift in its monetary policy outlook caused the NZD/USD pair to fall sharply and weighed on the positively-correlated AUD/USD pair. At the moment, the NZD/USD pair is losing more than 100 pips, or 1.6%, on the day.

On the other hand, the US Dollar Index in the early NA session extended its daily rebound toward the 97 area to reflect a broad-based USD strength and didn't allow the pair to start erasing its daily losses.

Key technical levels

The pair could face the initial support 0.7065 (Mar. 25 low) ahead of 0.7040 (Mar. 14 low) and 0.7000 (psychological level/Mar. 8 low). On the upside, resistances align at 0.7100/0.7110 (psychological level/Mar. 19 high), 0.7140 (Mar. 27 low) and 0.7170 (Mar. 21 high).