AUD/USD surrenders a major part of early recovery gains to 0.7100 mark

   •  Once again fails near 0.7100 mark amid the prevalent USD buying interest.
   •  The ongoing recovery in the US bond yields continues to underpin the buck.
   •  Hopes of progress in US-China trade talks might help limit deeper losses.

The AUD/USD pair surrendered a major part of its early modest recovery gains and remained within the striking distance of over one-week lows set in the previous session.

The pair continued with its struggle to make it through/build on its momentum beyond the 0.7100 handle, with some renewed US Dollar buying since the early European session prompting some fresh selling at higher levels. 

A strong follow-through recovery in the US Treasury bond yields remained supportive of the prevalent USD bid tone and has been one of the key factors keeping a lid on the attempted rebounds seen over the past two trading sessions.

The downside, however, remained cushioned amid renewed hopes over a progress in the US-China trade talks and improving global risk sentiment, which tends to underpin demand for the China-proxy Australian Dollar.

Hence, it would be prudent to wait for a strong follow-through selling before traders start positioning for any further near-term depreciating move back towards challenging the key 0.70 psychological mark.

Moving ahead, today's US economic docket, highlighting the release of the Fed's preferred inflation gauge - the core PCE price index, will now be looked upon for some impetus on the last trading day of the week. 

Technical levels to watch

The 0.7060-55 region might continue to protect the immediate downside, below which the weakening trend could further get extended towards testing sub-0.70 level. On the flip side, the 0.7100-0.7110 region now seems to have emerged as an immediate hurdle, which if cleared might trigger a short-covering bounce and lift the pair back towards weekly tops, around mid-0.7100s.