AUD/USD slips to fresh session lows, around mid-0.7700s

The AUD/USD pair traded with a mild bearish bias for the third consecutive session and remained within striking distance of over 2-1/2 month lows, touched on Friday.

The pair's initial uptick was capped at 100-day SMA support break-point, now turned resistance, and hence, the downtick could be attributed to some technical selling. Adding to this, weaker Chinese Caixin Markit September services PMI, falling to a 21-month low of 50.6, was also seen weighing on the China-proxy Australian Dollar.

Meanwhile, growing market conviction for additional Fed rate hike action in December continued pushing the US Treasury bond yields, which eventually underpinned the US Dollar and further collaborated towards driving flows away from higher-yielding currencies - like the Aussie. 

Currently trading around the 0.7760-55 region, fresh geopolitical tensions over the Korean peninsula might now limit any immediate sharp losses, at least for the time being.

Trading activity is expected to remain subdued in wake of a holiday in the US markets, with the US bond yield dynamics now turning out to be a key determinant of the pair's movement at the start of a new week. 

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Technical levels to watch

Friday's swing low, near 0.7730 level is likely to protect immediate downside, below which the pair is likely to accelerate the fall towards the 0.7700 handle ahead of 0.7685 horizontal support.

On the upside, any recovery attempts might continue to confront fresh supply near the 0.7785 region (100-day SMA), which if cleared might trigger a short-covering bounce towards 0.7830 level en-route 0.7860 strong hurdle.