AUD/USD extends Tuesday’s reversal farther below 0.77 handle

The AUD/USD pair extended overnight sharp reversal move from yearly tops and dropped farther below the 0.7700 handle amid global risk aversion trade. 

Tuesday's sharp reversal in the US equity markets triggered a fresh wave of risk-off environment in the FX market, which eventually drove flows away from riskier / higher-yielding currencies - like the Aussie. Moreover, weaker commodity prices, especially copper, further weighed on commodity currencies and collaborated to pair's corrective slide from Tuesday's over 4-month highs.

Persistent bearish sentiment around commodity space, coupled with a minor US Dollar up-tick, continued exerting selling pressure for the second consecutive session and dragged the major to weekly lows near mid-0.7600s.

Today’s US economic docket features the release of existing home sales data, later during the NA session, and would be looked upon for some short-term trading impetus.

Technical levels to watch

A follow through selling pressure below 0.7650 level is likely to accelerate the slide towards 50-day SMA support near 0.7610 region, below which the pair is likely to aim towards testing the very important 200-day SMA support near 0.7550-45 region.

On the upside, any recovery back above 0.7675 level might now confront strong resistance near 0.7700-0.7710 zone, which if cleared decisively might trigger a short-covering rally back towards multi-month highs resistance near mid-0.7700s before the pair eventually heads towards testing Nov. 2016 highs resistance near 0.7770-80 area.