• Hawkish FOMC helps revive USD demand.
• Rising US bond yields aggravate selling pressure.
• Chinese PMI/weaker commodities fail to lend any support.
The AUD/USD pair extended overnight rejection slide from the 0.8120 supply zone and remained under intense selling pressure through the early European session.
The pair once again failed to sustain its strength above the 0.8100 handle and retreated sharply on the back of a goodish US Dollar rebound, led by a more hawkish FOMC statement.
The latest policy update reinforced market expectations for at least three rate hikes in 2018 and the same is evident from a renewed pickup in the US Treasury bond yields, which was seen driving flows away from higher-yielding currencies - like the Aussie.
Adding to this, a mildly weaker trading sentiment around commodity space also did little to lend any support to the commodity-linked Australian Dollar and stall the pair's retracement slide for the fourth consecutive session.
Meanwhile, the market seems to have largely ignored today's better-than-expected Chinese Caixin manufacturing PMI for January, with the USD/US bond yield dynamics acting as key determinants of the pair's fall back towards the key 0.80 psychological mark.
Moving ahead, today's key highlight from the US economic docket - ISM manufacturing PMI, might provide some short-term trading impetus later during the early NA session. The key focus, however, would remain on Friday's NFP data, which would help determine the pair's next leg of directional move.
Technical levels to watch
On a sustained weakness below the 0.80 handle, the pair is likely to accelerate the slide towards 0.7960-55 support area ahead of the next major support near the 0.7935 region.
Meanwhile, on the upside, any recovery attempts might now confront fresh supply near 0.8050-55 area, above which the pair seems more likely to make a fresh attempt towards conquering the 0.8100 handle.
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