AUD/USD recovers lost ground, back closer to 4-month tops

   •  USD struggles to build on early recovery gains. 
   •  Softer US bond yields lending additional support.
   •  Focus shifts to Thursday’s key Aussie/Chinese macro data.

The AUD/USD pair quickly reversed a dip to 0.7940 level and is now headed back towards the top end of its daily trading range. 

The US Dollar pared some of its early gains and is once again retreating from mid-90.00s. This coupled with a modest pullback in the US Treasury bond yields further benefitted higher-yielding currencies and remained supportive of the pair's up-move since the early European session.

Meanwhile, a softer tone around commodity space, especially copper, did little to provide any boost to the commodity-linked Australian Dollar, with the USD/US bond yield dynamics playing a dominant role in driving the pair back closer to near 4-month tops, touched earlier.

It, however, remains to be seen if the bullish momentum is strong enough to lift the pair beyond the key 0.80 psychological mark as investors start repositioning for Thursday's key Aussie employment details and important Chinese macro releases.

In the meantime, the release of industrial production and capacity utilization data from the US would be looked upon for some short-term trading opportunities.

Technical levels to watch

On a sustained move beyond the 0.80 handle, the pair seems all set to aim towards testing 0.8030-50 supply zone before eventually darting towards the 0.8100 round figure mark. 

Alternatively, retracement back below 0.7960 level, leading to a subsequent drop below the 0.7940-35 region, might prompt some additional profit-taking slide towards the 0.7900-0.7890 horizontal support.