AUD/USD bounces off weekly lows, finds some support near 0.7800 mark

The AUD/USD pair refreshed weekly lows during the early European session, albeit quickly recovered few pips thereafter. The pair was last seen trading near the 0.7840 region, down around 0.40% for the day.

The pair witnessed some selling for the second consecutive session on Friday and extended the previous day's sharp fall from the key 0.8000 psychological mark, or fresh three-year tops. Some follow-through US dollar buying was seen as a key factor exerting pressure on the AUD/USD pair, through bulls managed to defend the 0.7800 round-figure mark.

As investors digested Fed Chair Jerome Powell's dovish remarks during the congressional testimony, the USD was back in demand amid a sudden spike in the US Treasury bond yields on Thursday. In fact, the yield on the benchmark 10-year US government bond rose beyond 1.50%, or more than one year high and provided a strong lift to the greenback.

Meanwhile, the fixed income market rout raised fears about distressed selling in other assets and took its toll on the global risk sentiment. This was evident from a sharp pullback in the equity markets, which further benefitted the greenback's relative safe-haven status and drove flows away from the perceived riskier aussie.

That said, a modest pullback in the US bond yields held the USD bulls from placing aggressive bets. This, in turn, extended some support, rather assisted the AUD/USD pair to stage a modest intraday bounce from the 0.7800 mark. It will now be interesting to see if the pair can capitalize on the move or meets with some fresh supply at higher levels.

Market participants now look forward to the US economic docket, featuring the releases of Core PCE Price Index, Goods Trade Balance and Chicago PMI. Apart from this, the US bond yields and the broader market risk sentiment will influence the USD price dynamics. This might assist traders to grab some short-term opportunities around the AUD/USD pair.

Technical levels to watch