AUD/USD keeps the red below 0.79 handle

The AUD/USD pair traded with mild negative bias at the start of a new trading week and eroded part of Friday's strong gains to 2-1/2 week tops.

Currently trading around 0.7880 level, just a few pips away from session lows, a modest uptick in the US Treasury bond yields helped the US Dollar to recover post-US CPI losses and weighed on higher-yielding currencies. 

Today's better-than-expected Chinese inflation figures did little to provide any fresh bullish impetus to the China-proxy Australian Dollar, albeit helped limit deeper losses, at least for the time being. 

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Adding to this, the prevalent strong bullish sentiment around commodity space, especially copper, was also seen underpinning demand for commodity-linked currencies and helped the pair to bounce off few pips from session lows. 

Traders now look forward to the US economic docket, featuring the release of Empire State Manufacturing Index, in order to grab some short-term opportunities. In the meantime, the US bond yield dynamics would remain an exclusive driver of the pair's movement through European trading session.

Technical levels to watch

Immediate support is pegged near 0.7860 level, below which the pair is likely to accelerate the slide back towards 0.7820 intermediate support en-route the 0.7800 handle. 

On the upside, momentum beyond the 0.7900 handle is likely to confront resistance near the 0.7915 region (50-day SMA), which if cleared could boost the pair further towards 0.7950-60 strong barrier.