AUD/USD keeps the red below 0.78 handle, focus remains on US jobs data

The AUD/USD pair recovered majority of its early steep losses to near 3-month lows but held in negative territory, below the 0.7800 handle.

Currently trading around 0.7775 area, the pair's recovery of around 30-pips could be attributed to a modest US Dollar retracement from 7-week tops and some repositioning trade ahead of the key event risk - the release of US monthly jobs.

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Moreover, a mildly positive trading sentiment around commodity space, especially copper, was also seen lending some support to commodity-linked currencies, including the Australian Dollar.

However, hopes for progress over the US President Donald Trump's proposed tax reforms and growing market conviction for an eventual December Fed rate hike action seems more likely to keep a lid on any meaningful sharp up-move for higher-yielding currencies - like the Aussie. 

Investors' focus on Friday would remain glued to the keenly watched NFP report, which is unlikely to alter the Fed's gradual monetary tightening cycle but would still provide fresh impetus for the pair's next leg of directional move.

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Technical levels to watch

Any follow through recovery move is likely to confront fresh supply near the 0.7800 handle, above which a bout of short-covering could lift the pair towards 0.7825-30 intermediate hurdle ahead of 0.7860 area.

On the downside, 0.7745 level now becomes immediate support to defend, which if broken would turn the pair vulnerable to break below the 0.7700 handle and test its next support near the 0.7685-80 region.