AUD/USD bounces off 200-DMA, but lacks conviction

   •  Manages to bounce off 200-day SMA technically important support
   •  Retracing US bond yields helped stage a modest recovery
   •  Upside seems capped, remains vulnerable to slide further

The AUD/USD pair gained some positive traction on Thursday and recovered part of previous session's slump to over 3-month lows.

Despite yesterday's upbeat US macro data, the US Dollar remained on the back-foot and was being further weighed down by a modest retracement in the US Treasury bond yields. A weaker tone around the US bond yields was seen benefitting higher-yielding currencies and helped the pair to stage a modest recovery from the very important 200-day SMA support. 

Today's modest recovery could also be attributed to some short-covering, from closer to a technically important support, and especially after the pair's recent fall of nearly 200-pips over the past four trading sessions. 

However, optimism over the US tax reforms and speculations over the appointment of the next Fed Chair kept a lid on any meaningful recovery, with the pair trimming some its early gains to currently trading around the 0.7710 region. 

Later during the NA session, second-tier US economic data - weekly jobless claims,  goods trade balance, prelim wholesale inventories and pending home sales, would now be looked upon to grab some short-term trading opportunities. 

Technical levels to watch

Any sustainable recovery attempt is likely to confront immediate hurdle near 0.7730-35 zone and is closely followed by resistance near mid-0.7700s. A convincing move beyond the mentioned barriers might trigger a fresh bout of short-covering and assist the pair back towards reclaiming the 0.7800 handle.

On the flip side, the 0.7700 handle (200-day SMA) remains an immediate strong support to defend, which if broken would pave way for extension of the pair's near-term depreciating slide towards the 0.7600 handle with some intermediate support near 0.7645-40 area.