AUD/USD hangs near 3-1/2 month lows, just above mid-0.7600s

   •  Fails to benefit from weaker USD and sliding US bond yields.  
   •  The latest Australian political drama capping any meaningful recovery.
   •  Seems vulnerable to slide further in the near-term. 

The AUD/USD pair struggled to build on Friday's tepid recovery gains and remained within striking distance of 3-1/2 month lows. 

The US Dollar corrective slide remained unabated, despite today’s in-line core PCE price index/personal income and better-than-expected personal spending data. The pair, however, has failed to benefit from broad-based USD retracement. 

   •  US: Personal income increased $66.9 billion (0.4%) in September

The market also seems to have largely negated a goodish recovery in copper prices, which tends to underpin demand for the commodity-linked Australian Dollar. Even a sharp retracement in the US Treasury bond yields failed to lend any support to the higher-yielding currency and stall the pair's slide to session lows near the 0.7660 region.

The latest Australian political drama, wherein the PM Turnbull's government lost its majority after the high court ruled that Deputy PM Barnaby Joyce is ineligible to remain in parliament as he was also a citizen of New Zealand when elected, seems to be the only factor weighing on the major and capping any meaningful recovery. 

Even from a technical perspective, the pair last week confirmed a bearish break below the very important 200-day SMA support and hence, remains vulnerable to extend its downward trajectory in the near-term.

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes: "Technically, the pair has corrected the oversold conditions reached on Friday, and seems now poised to resume its decline, as in the 4 hours chart, the advance was contained by a bearish 20 SMA, whilst the Momentum indicator is turning lower, well below its mid-line, whilst the RSI indicator remains flat around 37."