AUD/USD reverses softer Aussie CPI-led fall, back around 0.81 handle

   •  Persistent USD selling helps bounce off lows.
   •  Weaker US bond yields supportive of the up-move.
   •  Focus shifts to US ADP report and Fed decision.

The AUD/USD pair quickly reversed softer Aussie CPI-led losses and is now making a fresh attempt to move back above the 0.8100 handle. 

The pair continued with it’s struggled to sustain strength above the 0.8100 handle and retreated sharply following a miss from the quarterly Australian inflation figures. The pair dropped to an intraday low level of 0.8046 but has managed to bounce off lows amid persistent US Dollar selling bias.

The USD bulls were little impressed by from President Donald Trump’s first State of the Union Address, with a follow-through retracement in the US Treasury bond yields now seen benefitting higher-yielding currencies - like the Aussie. 

Meanwhile, today's slightly weaker than expected Chinese manufacturing PMI was largely negated by an upsurge in services PMI and did little to influence sentiment surrounding the China-proxy Australian Dollar. 

Investors' focus now shifts to the highly anticipated FOMC decision, which would help determine the pair's next leg of directional move. Ahead of the key event risk, the release of ADP report on the US private sector employment might provide some trading impetus during the early NA session. 

Technical levels to watch

A follow-through buying interest beyond the 0.8100 handle might continue to confront fresh supply near the 0.8135 region, above which the pair is likely to dart towards reclaiming the 0.8200 handle.

On the flip side, the 0.8050-40 region now seems to have emerged as an immediate strong support, which if broken is likely to accelerate the fall further back towards the key 0.80 psychological mark.