AUD/USD remains capped below mid-0.7900s supply zone

The AUD/USD pair continued with its struggled to move past 0.7950-55 supply zone and retreated from highs, albeit has managed to hold onto minor gains through the mid-European session.

The pair's pull-back lacked any catalyst and could be solely attributed to repositioning trade at an important technical resistance zone, despite of a broadly weaker US Dollar. Meanwhile, the prevalent risk-off environment was also seen dampening demand for riskier currencies - like the Aussie. 

Also restricting gains for the major was the expectation of an announcement of the US President Donald Trump’s long-awaited, highly-anticipated tax reform plan this week. 

However, the strong bullish sentiment around commodity space underpinned demand for commodity-linked currencies, including the Australian Dollar, and has helped the pair to hold in positive territory for the second consecutive session.

In absence of any major market moving economic releases, the pair's would continue to be influenced by the USD price dynamics and broader market risk sentiment as investors brace for this week's important US macro releases, including the US GDP revision and the keenly watched non-farm payrolls (NFP) data on Friday. 

Technical levels to watch

A follow through weakness below the 0.7930-25 region is likely to drag the pair below the 0.7900 handle towards last Thursday's swing lows support near 0.7865 area. 

On the upside, bulls would be eyeing for a sustained break through the 0.7950-55 important barrier, above which the pair is likely to make a fresh attempt towards conquering the key 0.80 psychological mark before eventually darting to its next hurdle near the 0.8035-40 region.