AUD/USD retreats from highs, back around mid-0.7900s

Having filled the weekly bearish gap, the AUD/USD pair ran through some fresh offers and quickly retreated around 20-pips from session tops touched in the past hour.

The Australian Dollar was being weighed down by downbeat domestic data, showing company operating profits declined by 4.5% in the second quarter as compared to a 4.0% decline expected. Meanwhile, operating profits for the first quarter were revised lower to a 5.8% increase from 6.0% growth reported earlier. 

   •  Australia: Weak Q2 business indicators - Westpac

Meanwhile, the US Dollar continued to be weighed down by Friday's disappointing US monthly jobs report and escalating geopolitical tension, following the latest hydrogen bomb test conducted by N. Korea, helping the pair to bounce off lows.

Market participants, however, remained convinced that the Fed might not be reluctant to raise interest rates again before the end of this year and would also start unwinding its massive $4.5 trillion balance sheet in September. A modest uptick in the US Treasury bond yields further reinforces the market expectations and was seen keeping a lid on any further up-move for higher-yielding currencies - like the Aussie. 

Technical levels to watch

Currently hovering around mid-0.7900s, immediate support is pegged near 0.7920 level, below which the pair is likely to drop below the 0.79 handle and retest 0.7870-65 important horizontal support.

On the upside, momentum above 0.7970 level might continue to confront some fresh supply near the key 0.80 psychological mark, which if conquered should lift the pair towards August monthly highs resistance just ahead of mid-0.8000s.