AUD/USD off lows, still in red below 0.80 handle

   •  Rebounds from mid-0.7900s on renewed USD weakness.
   •  Retracing US bond yields lend additional support.
   •  A slump in copper prices might cap additional gains.

The AUD/USD pair trimmed some of its steep losses and has managed to rebound around 25-pips from session lows.

The pair stalled its sharp retracement slide, led by the US tariffs on imported washing machines and solar panels, and found some support ahead of the mid-0.7900s amid a fresh wave of US Dollar selling bias.

With markets looking past the news of a deal to temporarily end the US government shutdown, a sharp retracement in the US Treasury bond yields prompted some fresh greenback weakness and was eventually seen lending support to higher-yielding currencies - like the Aussie. 

However, the ongoing slump in copper prices did little to provide any additional boost to the commodity-linked Australian Dollar and might now contribute towards limiting any meaningful up-move, at least for the time being.

In absence of any major market moving economic releases, the USD/US bond yield dynamics would continue to act as a key determinant of the pair's momentum on Tuesday. 

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes: “The short-term picture has turned bearish for the pair, as in the 4 hours chart, it broke below its 20 SMA, now turning flat in the 0.8000 region, while technical indicators entered negative territory with strong downward slopes, paring losses, however, near oversold readings. The risk is skewed toward the downside, but the bearish potential is limited, with an immediate support now around 0.7935, from where the pair bounced multiple times last week. Below this last, the next support comes at 0.7890, where the pair has the 61.8% retracement of the September/December slide.”