AUD/USD looking to grip 0.77 ahead of Aussie trade balance

• The AUD is hanging onto the 0.7700 level for now, but Trade Balance numbers at 01:30 GMT could change that.
• Markets have righted the risk-off capsize following tariffs spats, but market sentiment still hangs wary.

The AUD/USD is back at the week's highs just above the 0.7700 handle, holding near 0.7715 heading into the overnight session.

The Aussie staged a rally yesterday led by an upside beat to Australian retail sales, but lost ground as China fired back at the US with a reciprocal round of tariffs. Both countries have now leveled $50 billion dollars' worth (in US terms) of extra import duties at each other, but markets were able to stabilize in the US trading session and the Aussie rebounded back to the high side, reclaiming the 0.7700 handle after falling away to the 0.7660 level in European trading.

Wednesday will be seeing Australian Trade Balance figures quite early, at 01:30 GMT. The Trade Balance is expected to come in at 700M, a decline from the previous reading of 1,055M, but still a positive number.

It's also Non-Farm Payrolls week in the US, and traders are gearing up for a volatile reading of the NFP jobs report with extra emphasis on wages growth numbers buried within the report as the US Fed tries to decide how many rate hikes they'll be undergoing this year, with the current market expecting a further three hikes to come.

AUD/USD Levels to watch

The Aussie is working to stage a recovery against the US Dollar, but the pair is still trading on the downside after falling steadily since late January's peak, and as FXStreet's own Ross Burland noted, "the pair is making hard work of a recovery through the 10-D SMA and through the 0.77 handle, but daily closes below the former resistance at 10-D SMA ahead of the 76.4 Fibo at 0.7651 and a break below 0.7643 would set off a test of the 0.75 handle. On a break higher through 0.7780, and through the rising 200-D SMA just above the 0.78 handle,  0.7910 is open."