AUD/USD fails to sustain early up-move beyond 0.78 handle

The AUD/USD pair surrendered majority of its early strong gains and has retreated over 25-pips from a four-day high level of 0.7809. 

Speculation that the US President Donald Trump's push for a tax-code overhaul could be harmed weighed on the US Dollar. This coupled with today's stronger Australian Westpac Consumer Sentiment index, rising to the highest level since May 2016, further assisted the pair to move back above 100-day SMA support turned resistance. 

   •  Australia: Consumer sentiment lifts - Westpac

The up-move, however, is now turning out to be short-lived amid a modest pickup in the US Treasury bond yields, which extended some support to the US Dollar and kept a lid on any further up-move for higher-yielding currencies - like the Aussie.

Meanwhile, a mildly negative tone around commodity space, especially copper, also did little to lend any support and stall the pair's retracement 0.7780 area, closer to session lows. 

With the US bond yield dynamics turning out to be a key driver of the pair's movement on Wednesday, investors now look forward to the release of FOMC meeting minutes in order to determine the next leg of directional move. 

   •  US: FOMC minutes and Fed speak in focus today - TDS

Technical levels to watch

A follow through retracement is likely to find support near mid-0.7700s, below which the pair would turn vulnerable to break below 2-1/2 month lows support near 0.7730 level and head towards testing the 0.7700 handle.

On the flip side, the 0.7800 handle now becomes immediate strong resistance, which if conquered might trigger a short-covering bounce towards 0.7860-65 hurdle with some intermediate resistance near the 0.7820-25 region.