AUD/USD surrenders daily gains to 2-1/2 month tops, back below mid-0.7800s

   •  USD gains some respite from stellar ADP report.
   •  Surging US bond yields further prompt profit-taking.
   •  Chinese PMI/bullish commodities limit downside.

The AUD/USD pair erased all of its early gains and retreated nearly 30-pips from 2-1/2 month tops, albeit has managed to hold above session lows. 

The pair stalled its bullish trajectory near the 0.7855-60 immediate resistance and was being capped by a fresh wave of an upsurge in the US Treasury bond yields, which tends to drive flows away from higher-yielding currencies - like the Aussie.

The profit-taking slide accelerated during the early NA session following the release of upbeat private sector employment details from the US - ADP report, that provided a much-needed respite for the US Dollar bulls.

The pair, however, has managed to hold its neck comfortably above the 0.7800 handle, underpinned by today's stronger Chinese Caixin Services PMI and bullish trading sentiment around commodity space. 

It would now be interesting to see if bulls are able to maintain their dominant position or traders opt to lighten their bullish positions ahead of Friday's Chinese inflation figures and the keenly watched US monthly jobs report (NFP). 

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes: “The pair maintains its neutral-to-bullish bias short-term, as it holds near its recent highs. In the 4 hours chart, the pair develops above its 20 SMA that partially lost upward strength, while technical indicators have turned marginally lower, but remain within positive territory. Only below 0.7800, the pair will be at risk of further declines, although it will take a daily close below 0.7745 to consider an interim top and further slides ahead.”