AUD/USD recovers back above mid-0.7900s

The AUD/USD pair reversed majority of its early lost ground and has managed to recover around 25-pips from session lows.

The pair extended previous session's post-RBA retracement from closer to 26-month highs and Tuesday's pull-back was led by a goodish US Dollar recovery, in spite of lacklustre US economic data that fueled concerns about softening inflationary pressure and slowing manufacturing activity. 

The selling pressure remained unabated during Asian session on Wednesday amid a slump in iron ore prices, which weighed on commodity-linked currencies - like the Aussie. Traders even shrugged off stronger Australian building approvals data, jumping 10.9% in June and surpassing even the most optimistic estimates.

   •  Australia: Dwelling approvals surge 10.9% in June - Westpac

The greenback, however, struggled to extend overnight recovery move, with the pair catching some fresh bids near 0.7940-35 horizontal support. It would now be interesting to see if the pair is able to build on the up-move or runs through some fresh offers at higher levels in wake of a modest uptick in the US Treasury bond yields, which tend to dent demand for higher-yielding currencies - like the Aussie.

Investors now turn their focus to the US economic docket, featuring the release of US private sector employment details - ADP report, for some short-term trading impetus ahead of Friday's official jobs data (NFP).

Technical levels to watch

Any subsequent recovery beyond 0.7980 level is likely to confront some fresh supply near the key 0.80 psychological mark, above which the pair seems all set to aim back towards retesting multi-month highs resistance near 0.8065 level. On the flip side, bears would be eyeing for a decisive weakness below 0.7940-35 immediate support, which if broken could accelerate the corrective slide back towards the 0.7900 handle.