AUD/USD rebounds from near 3-month lows, still weaker below 100-DMA

The AUD/USD pair trimmed some of its early losses and has managed to recover around 20-pips from near-three month lows touched earlier.

The pair extended previous session's sell-off and was being weighed down further by RBA rate cut talks. Following yesterday's big miss in the Aussie Retail Sales, RBA board member Ian Harper, as reported by the Wall Street Journal, was noted saying that the central bank would not risk premature tightening and saw scope for a rate cut, if consumption loses momentum.

   •  RBA is still not ruling out rate cut - WSJ

The selling pressure aggravated amid strong follow through US Dollar buying interest, supported by incoming stronger US economic data. The recent greenback rally got an additional boost after the Republican-controlled House of Representatives approved a fiscal 2018 spending blueprint and moved one step closer to overhaul the US tax code.

Adding to this, ongoing upsurge in the US Treasury bond yields, amid growing prospects for additional Fed rate hike action in December and reinforced by hawkish Fedspeaks, further drove flows away from higher-yielding currencies - like the Aussie. 

Meanwhile, possibilities of some stops being triggered on a decisive break below 100-day SMA support, near the 0.7785-80 region, could have also collaborated to the pair's sharp slide to its lowest level since mid-July. 

Bears now seemed inclined to lighten their positions ahead of today's key event risk - NFP report, due later during the day, which eventually seems to have helped the pair to bounce off from session lows. 

Technical levels to watch

A fresh wave of selling pressure is likely to extend the slide towards 0.7730 intermediate support before the pair eventually drops to sub-0.7700 level and test is next support near the 0.7685-80 region.

On the upside, any recovery attempts might now confront fresh supply at 100-day SMA, support turned resistance, near the 0.7780-85 region, above which a bout of short-covering could lift the pair beyond the 0.7800 handle towards its next resistance near 0.7820-25 zone.