AUD/USD retreats from one-week highs, back closer to mid-0.7800s

The AUD/USD pair extended previous session's recovery move from 2-1/2 month lows and touched a one-week high level of 0.7875, before retreating few pips. 

A modest US Dollar retracement, primarily led by some profit taking amid absent top tier economic releases on Tuesday, helped the pair to rebound from the vicinity of 100-day SMA important support. 

Adding to this, a mildly softer tone around the US Treasury bond yields provided an additional boost to higher-yielding currencies and collaborated to the pair's tepid recovery move for the second straight session.

However, growing market expectations that the Fed would raise interest rates for the third time in December, coupled with optimism over US tax reform might now contribute towards keeping a lid on any sharp near-term up-move. 

   •  US: Fed prepares market for rate rise – HSBC

Today's US economic docket, featuring the release of ADP report and ISM non-manufacturing PMI would now be looked upon for some short-term trading opportunities. 

Later during the NY trading session, the Fed Chair Janet Yellen's speech might also provide some impetus ahead of Australian macro data - monthly retail sales and trade balance data, due for release during early Asian session on Thursday.

   •  Australia’s retail sales to show the first negative outcome since March - ANZ

Technical levels to watch

A follow through retracement below 0.7830 immediate support is likely to drag the pair back below the 0.7800 handle towards 100-day SMA support, currently near the 0.7775 region.

On the upside, momentum beyond 0.7870-75 area could get extended towards the 0.7900 handle, above which a bout of short-covering is likely to lift the pair further towards 50-day SMA hurdle near the 0.7935 region.