• Surging US bond yields prompt some profit-taking.
• Weaker commodity prices added to the downslide.
• Correction remains shallow ahead of US data and FOMC minutes.
The AUD/USD pair stalled its corrective slide near the 0.7800 handle and was placed in negative territory during the early European session on Wednesday.
The pair extended overnight retracement from 2-1/2 month tops and traded with minor losses for the first session in the previous ten. A modest US Dollar rebound, backed by a sharp follow-through upsurge in the US Treasury bond yields has been one of the key factor weighing on higher-yielding currencies - like the Aussie.
This coupled with a mildly softer tone around commodity space, especially copper, was further seen denting demand for the commodity-linked currency. Traders also seemed inclined to take some profits off the table following the recent strong up-move of nearly 350-pips from the key 0.75 psychological mark, touched on December 8.
The downside, however, remained cushioned, with the pair finding decent support near the 0.7800 handle and rebounding around 25-pips from session lows amid some repositioning trade ahead of today's important releases from the US - ISM manufacturing PMI and December FOMC meeting minutes, due later in the day.
In the meantime, the US bond yield dynamics might continue to influence the pair's momentum and help traders to grab some short-term trading opportunities.
Technical levels to watch
Immediate resistance remains near the 0.7840-50 region, above which the pair is likely to dart towards testing 0.7875 hurdle en-route the 0.7900 handle. On the flip side, a decisive break below the 0.7800 immediate support could accelerate the profit-taking slide towards 100-day SMA support near the 0.7785 region before the pair eventually drops to its next support near 0.7745-35 zone.
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