AUD/USD clings to gains, comfortable above 0.7700 handle
• Subdued USD demand helps offset weaker commodity prices.
• Rising US bond yields/Australian political tension likely to cap further gains.
The AUD/USD pair started the new week on a positive note and held comfortably above the 0.7700 handle through the Asian session.
After Friday's sharp retracement, the pair caught some fresh bids on Monday and was being supported by a subdued US Dollar price action amid concerns over a full-blown US-China trade war.
Meanwhile, a slight recovery in investors' appetite for riskier assets helped offset the prevalent negative trading sentiment around copper prices and was seen underpinning demand for the perceived riskier/commodity-linked Australian Dollar.
It, however, remains to be seen if the pair is able to build on the momentum or once again fizzles out at higher level amid a modest uptick in the US Treasury bond yields, which tends to drive flows away from higher-yielding currencies - like the Aussie.
Adding to this, the latest political tensions propping up in Australia, wherein the result of the widely watched opinion poll showed that the Australian PM Turnbull is just one poll away from a symbolically significant 30th poll loss, might further collaborate towards keeping a lid on any meaningful up-move, at least for the time being.
In absence of any major market moving economic releases, the scheduled speeches by influential FOMC members would influence the USD price dynamics and eventually assist traders to grab some short-term trading opportunities.
Technical levels to watch
Any subsequent up-move is likely to confront strong resistance near 0.7750-55 area, above which the pair is likely to aim towards testing important moving averages (200 & 100-day SMA) confluence hurdle near the 0.7800 handle.
On the flip side, 0.7695-90 area now seems to have emerged as an immediate support, which if broken might now turn the pair vulnerable to slide further towards the 0.7640-35 intermediate support en-route the 0.7600 handle.