AUD/USD keeps the red near 0.80 handle, US ISM PMI next

   •  Surging US bond yields continue to weigh.
   •  Subdued USD demand help limit losses.
   •  Traders eye US ISM PMI for fresh impetus.

The AUD/USD pair continued losing ground through the mid-European session and tumbled to 1-1/2 week lows in the last hour, albeit recovered few pips thereafter.

A fresh wave of an upsurge in the US Treasury bond yields, triggered by Wednesday's hawkish FOMC monetary policy statement, continued exerting downward pressure on higher-yielding currencies - like the Aussie. 

The selling pressure was further aggravated by some follow-through long-unwinding, especially after the pair's recent repeated failed attempts to sustain its strength above the 0.8100 handle and move past the 0.8120 supply zone. 

Meanwhile, a mildly positive trading sentiment around commodity space, especially oil, was also seen lending some support to the commodity-linked Australian Dollar. Adding to this, the post-Fed US Dollar recovery move now seems to have lost steam and further contributed towards limiting any deeper losses, at least for the time being. 

Next in focus would be the US ISM manufacturing PMI, the highlight from today's US economic docket, which should provide some fresh trading impetus ahead of Friday's keenly watched NFP data. 

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes, “the 4 hours chart shows that the price has fallen well below a now bearish 20 SMA, while technical indicators have neared oversold territory before paring their slides. Nevertheless, the risk remains skewed toward the downside as indicators gave no sign of downward exhaustion.  Should the 0.8000 level give up, the pair has then scope to extend its decline to 0.7956, January 23rd daily low, en route to the 0.7920 region. Much of the upcoming movements will depend on how US employment data results, as better-than-expected numbers will give the greenback a temporal boost.”