AUD/USD bounces off two-week lows, now around 0.7365 level

   •  A modest USD retracement helps ease the bearish pressure. 
   •  Disappointing US housing market data prompts some short-covering.

The AUD/USD pair trimmed some of its early steep declines and recovered around 20-25 pips from over two-week lows touched earlier. 

The strong US Dollar bullish run took a brief pause following today's disappointing US housing market data and was seen as one of the key factors helping ease the prevalent strong bearish pressure surrounding the major. 

In fact, building permits dropped 2.2% m/m, marking its biggest drop in starts since Nov. 2016, and housing starts collapsed 12.3% m/m to the lowest level since Sept. 

Further gains, however, are likely to remain limited amid negative commodity prices, especially copper, which tend to undermine demand for the commodity-linked Australian Dollar. 

Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair might have bottomed out in the near-term.

Investors now look forward to the Fed Chair Jerome Powell's second day of testimony, this time before the House Financial Services Committee, for some fresh impetus ahead of the Aussie jobs report, due for release during the Asian session on Thursday.

Technical levels to watch

Immediate resistance is pegged near the 0.7380 horizontal level, above which a bout of short-covering could lift the pair back above the 0.7400 handle towards retesting the 0.7440 supply zone. 

On the flip side, 0.7345-40 area might continue to protect the immediate downside, which if broken might turn the pair vulnerable to aim towards challenging the 0.7300 round figure mark.