AUD/USD edges lower toward mid-0.72s as DXY advances to 96.50 area

• RBA's Lowe says the overall economic picture is positive.
• Concerns over a slowdown in China's economy weigh on AUD.
• US Dollar Index continues to recover yesterday's losses.

The AUD/USD came under a heavy selling pressure in the early European morning and fell to a fresh 3-day low at 0.7250 before staging a modest rebound. However, with the greenback gathering strength against its rivals in the NA session, the pair failed to extend its recovery move and was last seen trading at 0.7260, losing 0.45% on a daily basis.

Earlier today, while speaking at the CEDA Annual Dinner in Melbourne, RBA Governor Philip Lowes said that the overall economic picture was positive and that they were moving closer to full employment. Nevertheless, the AUD failed to take advantage of these positive remarks amid concerns over the economic slowdown in Australia's biggest trading partner, China. Chinese Finance Ministry official Tan Long today said that the economic uncertainties and the downward pressure on the economy had both increased.

On the other hand, with major European currencies staying under pressure amid the never-ending political jitters surrounding the UK and Italy, the US Dollar Index gained traction on Tuesday to make it difficult for the pair to reverse its direction. At the moment, the DXY is up 0.35% on the day at 96.50. Meanwhile, today's data from the U.S. showed that housing starts increased 1.5% in October following September's 5.5% decline to provide an additional boost to the buck.

Technical levels to consider

The initial support for the pair aligns at 0.7250 (daily low) ahead of 0.7220 (100-DMA/20-DMA) and 0.7185 (Nov. 14 low). On the upside, resistances are located at 0.7300 (psychological level/daily high), 0.7340 (Nov. 16 high) and 0.7380 (Aug. 21 high).