AUD/USD surrenders daily gains, retreats back closer to session lows

   •  A modest USD rebound prompts some aggressive selling.
   •  Subdued commodities/weaker bond yields fail to lend any support.
   •  Now seems vulnerable to slide further in the near-term.

The AUD/USD pair surrendered majority of its early gains to the 0.7900 neighborhood and is currently placed at the lower end of its daily trading range.

The pair's sharp retracement of around 50-pips from session tops lacked any fundamental catalyst and was primarily led by a modest US Dollar rebound. This coupled with a subdued action around commodity space also did little to lend any support to the commodity-linked Australian Dollar and stall the pair's intraday drop of over 50-pips. 

Traders even shrugged off a sharp retracement in the US Treasury bond yields, which tend to benefit higher-yielding currencies - like the Aussie, with the USD price dynamics acting as a key determinant of the pair's momentum at the start of a new trading week. 

The downfall could also be attributed to some technical selling near an important hurdle and as Valeria Bednarik, American Chief Analyst at FXStreet notes, "it met selling interest at a major resistance level, the 38.2% retracement of the December/January rally, which probed being a strong resistance/support multiple times over the last weeks."

Currently trading around the 0.7845-40 region, traders now look forward to the release of new home sales data from the US for some fresh impetus ahead of the Fed Governor Randal Quarles' scheduled speech later during the NY session.

Technical outlook

Valeria further writes: “In the 4 hours chart, the pair is trading above a directionless 20 SMA, while technical indicators retreat within positive territory, not enough to confirm a bearish continuation but indeed reflecting a limited upward potential. The pair has the next Fibonacci support around 0.7820, with a break below the level exposing the lows from last week around 0.7790.”