• Investors looked past a US government shutdown.
• Surging US bond yields help revive USD demand.
• Overbought conditions warrant near-term consolidation/retracement.
The AUD/USD pair struggled for a firm directional bias and was seen consolidating in a narrow trading band, just below the key 0.80 psychological mark.
The US Dollar has managed to recover opening losses, led by a US government shutdown, and was being supported by a strong showing around the US Treasury bond yields, which was eventually seen capping gains for higher-yielding currencies - like the Aussie.
Meanwhile, the prevalent positive trading sentiment around commodity space, especially copper, was seen lending support to the commodity-linked Australian Dollar and cushioned any deeper corrective slide, at least for the time being.
Looking at the broader picture, the pair's repeated failures to build on its up-move beyond the 0.80 handle now seems to suggest that a near-term top might already be in place. Moreover, near-term overbought conditions also warrant some near-term pull-back or a consolidation phase before the pair is able to resume with its prior strong appreciating move.
There aren't any major market-moving economic releases due today and hence, the USD/US bond yield dynamics would continue to play an important role in determining the pair's momentum on the first trading day of a new week.
Technical levels to watch
Immediate support is pegged near 0.7965 level and is closely followed by support near the 0.7940 region, which if broken could drag the pair back below the 0.7900 handle towards its next support near 0.7860 area.
On the upside, sustained move beyond the 0.80 handle might continue to confront some fresh supply near the 0.8030 region, above which the pair is likely to aim towards reclaiming the 0.8100 handle.
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