AUD/USD retreats but holds above 0.7830

• AUD/USD off highs as US Dollar recovers, still up for the day. 
• Data ahead: retail sales in Australia and US CPI.

The AUD/USD pair approached January highs but then lost strength and pulled back amid a recovery of the US dollar. The greenback trimmed losses, sending the pair to 0.7830. 

Earlier today a report from Bloomberg mentioned that Chinese official could recommend a reduction or a cut of purchases of US government bonds. The report triggered a USD sell-off and sent yields sharply higher. During the last hour, the dollar pulled back while US yields remained near daily highs. Comments from Dallas Fed President Kaplan's contributed to add to March rate hike expectations. He sounded in favor of three more rate hikes in 2018. 

Equity prices in Wall Street trimmed losses after a negative opening. The Dow Jones was off lows, falling just 0.10%. Gold soared to $1,327/oz earlier and then retreated more than $10 from the highs. The slide in commodity prices weakened AUD/USD. 

On Thursday, Australian retail sales and US CPI data will be released. Both numbers could have an impact on the pair. 

Technical levels to consider

AUD/USD continues to move in ranges, consolidating around 2-month highs. The upside remains capped by 0.7870 while the 0.7800 handle is offering support. 

To the downside, the immediate support might lie at 0.7830 (US session low / 20-hour moving average), 0.7805 (Dec 9 & 10 low) and 0.7775 (Dec 27 low). On the upside, resistance could be seen at 0.7850 followed by the 0.7870 region (Jan high) and 0.7905.