AUD/USD struggling near 3-1/2 month lows

   •  Weighed down by persistent USD strength and rising US bond yields.
   •  The latest Australian political drama adds to selling pressure. 

The AUD/USD pair extended its recent downward trajectory and dropped to fresh 3-1/2 month lows on Friday. 

The pair remained under selling pressure for the sixth consecutive session and has now retreated over 250-pips from the 0.7900 neighborhood touched last Friday. 

Persistent US Dollar buying interest, supported by some renewed uptick in the US Treasury bond yields has been one of the key factors weighing on higher-yielding currencies - like the Aussie. Progress over the US President Donald Trump’s tax overhaul plans and increasing hopes for a more hawkish Fed Chair remained supportive of the recent greenback strength. 

The Australian Dollar was also being weighed down by the latest domestic political drama, wherein the PM Turnbull's government lost its majority after the high court ruled that Deputy PM Barnaby Joyce is ineligible to remain in parliament as he was also a citizen of New Zealand when elected.

Adding to this, a larger-than-expected drop in the Australian PPI dented the already weaker sentiment and further collaborated to the pair's slide to its lowest level since July 11. 

Currently trading around 0.7635 area, traders now look forward to the advance US Q3 GDP release for some fresh impetus. 

Technical levels to watch

Weakness below 0.7625 level is likely to find support near the 0.7600 handle, which if broken is likely to accelerate the fall towards 0.7570 horizontal support en-route 0.7530-20 support area.

On the upside, any recovery attempts beyond 0.7655-60 hurdle could get extended, but is likely to be capped at the very important 200-day SMA support break-point, now turned strong resistance near the 0.7695-0.7700 region.