AUD/USD pulls away from daily highs, clings to small gains near 0.72

• China's stimulus efforts help AUD gather strength on Tuesday.
• USD strength forces the pair to retrace its daily advance.
• December PPI and NY Fed Empire State Manufacturing report coming up next.

With China announcing new measures to boost economic growth, currencies such as the AUD and the NZD outperformed its rivals during the Asian session on Tuesday and the AUD/USD pair rose to a daily high of 0.7226. However, with the greenback starting to gain traction in the last couple of hours, the pair failed to extend its rally and erased a large part of its daily gains. As of writing, the pair was trading a couple of pips above 0.72, adding only 0.1% on a daily basis.

Earlier today, China’s State Planner, the National Development and Reform Commission (NDRC), published an official statement highlighting that China will implement larger tax and fee cuts in 2019 while strengthening the counter-cyclical adjustments in the macroeconomic policy to stimulate the economic growth. 

On the other hand, with investors staying away from European currencies ahead of ECB President Draghi's speech and the critical Brexit vote in the UK, the greenback finds demand on Tuesday to lift the US Dollar Index closer to the 96 mark and weighing on the pair. At the moment, the DXY is up 0.3% on the day at 95.87. Later in the session, the PPI report and the NY Fed Manufacturing Index from the U.S. will be looked upon for fresh impetus.

Technical levels to consider

With a daily close below 0.7200 (psychological level), the pair could extend its slide toward 0.7145 (Jan. 10 low) and 0.7100 (psychological level/20-DMA). On the upside, resistances are located at 0.7225 (daily high), 0.7265 (Dec. 6, 2018, high) and 0.7325 (Nov. 28, 2018, high).