AUD/USD recovers from over 3-month lows, retakes 0.77 mark and beyond

   •  Reverses an early fall below 200-DMA, 3-1/2 month lows.
   •  Sliding US bond yields prompting some short-covering.

The AUD/USD pair has managed to recover its early lost ground to over 3-month lows and now seems to have steadied marginally above the 0.7700 handle. 

The pair's sharp recovery over the past couple of hours, back closer to the top end of the daily trading range, lacked any fundamental driver and could be solely attributed to some short-covering. 

A weaker tone around the US Treasury bond yields happens to be one of the key factors prompting bears to lighten their bearish bets around higher-yielding currencies - like Aussie.

Meanwhile, traders seemed to have largely ignored a modest pickup in the US Dollar demand and a mildly softer tone around commodity space, albeit might contribute towards keeping a lid on any further recovery.

Next in focus would be the US economic docket, featuring the release of jobless claims, goods trade balance, prelim wholesale inventories and pending home sales, which is likely to be overshadowed by ECB-led volatility in the FX market.

Technical levels to watch

Immediate resistance is pegged near 0.7735-40 area, above which a fresh bout of short-covering could lift the pair back towards reclaiming the 0.7800 handle. On the downside, the 0.7695 region (200-day SMA) now becomes an immediate support to defend, which if broken would turn the pair vulnerable to extend its near-term downward trajectory towards 0.7625 intermediate support en-route the 0.7600 handle.