AUD/USD retreats from highs, remains capped at 100-DMA barrier

   •  Manages to defend 0.78 handle
   •  Upside capped at 100-day SMA
   •  Australian CPI in focus

The AUD/USD pair gained some positive traction on Tuesday and rose to an intraday high level of 0.7825 before retreating few pips to currently trading around 0.7810 level. 

Bounces off 0.78 handle

A mildly softer tone around the US Treasury bond yields failed to provide any fresh bullish impetus to the US Dollar and was seen benefitting higher-yielding currencies. The pair managed to defend the 0.7800 handle and staged a minor recovery from 1-1/2 week lows. 

100-DMA capping recovery move

Bulls, however, lacked strong conviction and the pair struggled to move back above 100-day SMA hurdle, despite a strong upsurge in copper prices, which tends to underpin demand for commodity-linked currencies - like the Aussie. 

Growing optimism over the US President Donald Trump's proposed tax reforms has been one of the key factors keeping a lid on any meaningful up-move for the major. 

Wednesday's Australian CPI in focus

Moreover, investors also seemed to refrain from placing aggressive bets ahead of Wednesday's key release of Australian inflation figures, which should now act as a fresh catalyst for the pair's near-term trajectory. 

   •  Australia: Q3 CPI likely to print 0.7% - Westpac

In the meantime, the preliminary US Markit manufacturing PMI, due later today and expected to tick higher to 53.6 (from 53.1) in October, might provide some short-term trading impetus. 

Technical levels to watch

A decisive break below the 0.7800 handle is likely to accelerate the fall towards 0.7755-50 support area before the pair eventually drops to test the 0.7700 round figure mark.

On the upside, 100-day SMA near the 0.7825 region remains an immediate strong hurdle, which if conquered might trigger a short-covering bounce towards mid-0.7800s en-route 0.7880 supply zone.