AUD/USD retreats to session lows, back below 0.79 handle

The AUD/USD pair reversed all of the early gains to multi-day tops and has now dropped to fresh session lows, in the region of 0.7890-85 band.

Today's weaker Chinese economic data dump - Industrial Production, Fixed Asset Investment and retail sales data, had a negative impact on the China-proxy Australian Dollar. Meanwhile, investors now seemed to look past Friday's dismal US inflation figures and hence, a pickup in the US Treasury bond yields helped the US Dollar to recover a bit and was also seen weighing on higher-yielding currencies - like the Aussie. 

Even a subdued action around commodity prices, especially copper, did little to extend any support to the commodity-linked currencies, including the Aussie, with a modest USD recovery acting as an exclusive driver of the pair's sharp retracement over the past hour or so.

In absence of any major market moving economic releases, the pair remains at the mercy of US bond yield dynamics ahead of Tuesday's RBA monetary policy meeting minutes and the US monthly retails sales data.

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Technical levels to watch

Immediate support is pegged near the 0.7875-70 region, which if broken might now drag the pair below 0.7840 level (Friday's low) and 0.7825 intermediate horizontal support, towards its next major support near the 0.7800-0.7795 region. 

On the upside, 0.7920 level now seems to have emerged as immediate resistance, above which a fresh bout of short-covering could lift the pair towards 0.7965-70 horizontal resistance ahead of the key 0.80 psychological mark.