AUD/USD recovers early lost ground, but remains capped below 0.80 handle

The AUD/USD pair caught some fresh bids at lower level and has now recovered early lost ground, albeit remained capped below the key 0.80 psychological mark. 

A sharp fall in Australian new home sales data dragged the pair to session lows near the 0.7955 region. The pair, however, quickly regained traction after the latest Chinese PMI prints showed continued expansion in both the manufacturing and services sector. 

Being Australia's largest trading partner, stronger Chinese data tends to benefit China-proxy Australian Dollar. Adding to this, a better-than-expected private sector credit growth in Australian further supported the pair's recovery from session lows. 

Meanwhile, the recovery move lacked conviction amid a modest US Dollar recovery, which was seen keeping a lid on the pair's up-move, at least for the time being. 

Against the backdrop of perceived dovish FOMC statement, the current USD pull-back from multi-month lows runs the risk of fizzling out at higher levels. Hence, prospects of the pair decisively breaking through the 0.80 handle, and extending its near-term bullish trajectory beyond 26-month highs touched last week, remains a distinct possibility.

Later during the NA session, the US economic docket would now be looked upon for some fresh trading impetus ahead of the RBA monetary policy decision during Asian session on Tuesday.

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Technical levels to watch

On a sustained move beyond the 0.80 mark, the pair is likely to dart back towards multi-month highs resistance near the 0.8065 region before aiming to reclaim the 0.8100 handle and head towards its next hurdle near 0.8125-30 zone.

Meanwhile, on the downside, decisive weakness below mid-0.7900s might turn the pair vulnerable to head back towards retesting the 0.7900 handle en-route 0.7875 horizontal support.