•  Aussie MI consumer inflation gauge offsets upbeat housing/Chinese data.
   •  A modest USD rebound adds to the downward pressure.
   •  Sliding US bond yields help limit downfall ahead of Tuesday’s RBA decision.

The AUD/USD pair maintained its offered tone through the early European session and is currently placed within striking distance of over 2-month lows set last Thursday.

Despite the prevalent negative sentiment surrounding the US Dollar, the pair failed to attract any buying interest and was being weighed down by a drop in Melbourne Institute's monthly consumer inflation gauge. 

Softer inflation data largely negated upbeat Aussie building approvals data and mostly in-line Chinese Caixin Services PMI. This coupled with a modest USD rebound during the early European session further collaborated towards keeping a lid on any attempted recovery move. 

However, the ongoing slide in the US Treasury bond yields, primarily led by global risk-off mood, helped limit deeper losses for higher-yielding currencies - like the Aussie. Moreover, traders also seemed reluctant to place any aggressive bets ahead of tomorrow’s RBA monetary policy decision and helped ease the bearish pressure, at least for the time being.

Currently trading around mid-0.7700s, traders now look forward to the release of US ISM non-manufacturing PMI for some fresh impetus later during the early NA session.

Technical levels to watch

A follow-through selling pressure could again expose 0.7715-10 support area, below which the pair is likely to break below the 0.7700 handle and head towards testing 0.7665-60 strong horizontal support. 

On the upside, any recovery attempts might continue to confront some fresh supply at the very important 200-day SMA, currently near the 0.7780 region, which if cleared might trigger a short-covering bounce towards 0.7820 hurdle.

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