AUD/USD eyeing to recover back above 0.7900 handle

The AUD/USD pair held weaker for the seventh consecutive session and broke below the 0.7900 handle to hit three-week lows during Asian session on Wednesday, albeit recovered few pips thereafter.

The Australian Dollar weakened after softer domestic data that showed home loans growth slowed to 0.5% m-o-m in June as compared to 1.5% gains expected, which pointed to a possible slowdown in the Australian housing market. This coupled with a slight miss in the Chinese CPI print for July did little to lend any immediate support to the China-proxy Australian Dollar.

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Meanwhile, a fresh wave of global risk aversion trade, in wake of rising geopolitical tensions stemming from the Korean Peninsula, provided an additional boost to the greenback's safe-haven appeal against its Australian counterpart. Adding to this, reviving hopes for additional Fed rate hike action, following Tuesday's strong JOLTS job openings data, underpinned the US Dollar demand and was also seen weighing on higher-yielding currencies - like the Aussie. 

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The pair, however, has managed to bounce off around 30-pips from session lows and in absence of any fresh development, the recovery could be solely attributed to some profit taking, especially after the pair's recent slide of nearly 200-pips from closer to 26-month highs touched last Tuesday. 

Later during the NA session, the quarterly releases of Prelim Nonfarm Productivity and Unit Labor Costs would now influence sentiment around the buck and would be looked upon for some fresh impetus for the major.

Technical levels to watch

Any further recovery might now confront resistance near the 0.7900 handle, above which a bout of short covering could lift the pair back towards 0.7945-50 horizontal barrier en-route 0.7980-85 resistance. On the flip side, weakness below session lows support near 0.7855 level could get extended towards 0.7825 horizontal level before the pair eventually drops to test the 0.7800-0.7790 support zone.