AUD/USD continues to trade in lower half of daily range near 0.6970

• US Dollar Index clings to daily recovery gains.
• Upbeat sentiment helps the pair limit its losses.
• Coming up: NAB's Business Confidence Index.

The AUD/USD pair struggled to build on last week's gains and turned south on Monday as the broad-based USD strength put it under renewed bearish pressure. As of writing, the pair, which touched a 6-day low of 0.6959 in the early NA session, was trading at 0.6965, erasing 0.47% on a daily basis.

Heightened odds of the Fed cutting rates to counter the negative impact of escalating geopolitical tensions on the economy last week weighed on the greenback and allowed the pair to gain traction. Following its fall to a fresh multi-month low of 96.46 last Friday, however, the US Dollar Index started the new week on a strong footing and was last adding 0.25% on the day at 96.80.

Although there were no macroeconomic data releases from the U.S. that could have supported the DXY's recovery, the sharp rebound witnessed in the 10-year Treasury bond yield amid improving market sentiment seems to be helping the currency find demand and outperform its rivals. On the other hand, the risk-on mood helps the rate-sensitive AUD limit its losses for the time being as well.

In the early trading hours of the Asian session on Tuesday, the National Australia Bank's Business Confidence Index will be looked upon for fresh impetus. Later in the day, the NFIB Optimism Index and Producer Price Index figures from the U.S. will be published.

Technical levels to watch for

The pair could face the initial support at 0.6940 (20-DMA) ahead of 0.6900 (May 31 low) and 0.6865 (Nay 23 low). On the upside, resistances are located at 0.7000 (50-DMA/psychological level), 0.7050 (100-DMA) and 0.7070 (Aper. 30 high).