AUD/USD once again fails ahead of 0.77 handle, headed back to session lows

   •  Struggles to move past 200-DMA strong barrier.
   •  RBA dials back its inflation forecast, signals rates on hold.
   •  Pickup in the US bond yields adds to downward pressure.

The AUD/USD pair continued with its struggle to move past the very important 200-day SMA hurdle and has now drifted into negative territory. 

In its latest assessment of the economy, the Reserve Bank of Australia (RBA) slashed its inflation forecasts over the next two years on concerns over slow wages growth. The dovish outlook implied that the central bank was in no rush to lift interest rates anytime soon and dragged the pair to a session low level of 0.7664. 

The pair quickly rebounded from lows and retested the 0.7695-0.7700 region, 200-day SMA supply zone. However, a strong uptick in the US Treasury bond yields helped offset US tax bill concerns and extended some support to the US Dollar demand, which eventually capped any additional gains for higher-yielding currencies - like the Aussie.

The pair has now retreated back to the lower end of the daily trading range as traders now look forward to the only scheduled release of Prelim UoM Consumer Sentiment Index from the US for some short-term trading impetus.

In the meantime, the US bond yield dynamics would continue to act as an exclusive driver of the pair's momentum on the last trading day of the week.

Technical levels to watch

Immediate support is pegged near mid-0.7600s and is closely followed by multi-month lows support near the 0.7625 region. A follow-through weakness could drag the pair below the 0.7600 handle towards its next support near the 0.7580-75 region.

On the upside, the 0.7695-0.7700 region (200-day SMA) remains immediate strong, which if conquered is likely to trigger a short-covering bounce towards 0.7755-60 horizontal resistance.