AUD/USD sticks to modest recovery gains but remains capped below 0.80 handle

The AUD/USD pair gained some positive traction during Asian session on Tuesday and recovered part of previous session's drop to over two-week lows.

The pair got a minor boost from today's better-than-expected house price index for the second quarter, though showed prices rising at a slightly slower pace of 1.9% q-o-q as compared to previous quarter's rise of 2.2%. 

Meanwhile, the market seems to have digested a rather neutral RBA September meeting minutes, revealing central bank's steady policy views for some time and a need to balance risks of high household debt against low inflation.

   •  RBA minutes: Bank is still balanced around the policy risks - Westpac

Despite of the up-move, the pair remained capped below the key 0.80 psychological mark amid growing conviction that the Fed would stick to its plan and raise at least once by the end of this year. 

   •  Fed will announce that balance sheet reduction will start in Oct - HSBC

Hence, investors' attention would remain glued to the outcome of a two-day FOMC meeting and rate decision on Wednesday, which would help investors determine the next leg of directional move for higher-yielding currencies - like the Aussie.

In the meantime, today's second-tier US economic data - housing market data, current account numbers and export/import price index, would be looked upon to grab some short-term trading opportunities ahead of the key event risk. 

Technical levels to watch

Immediate upside resistance remains near the 0.80 handle, above which the pair is likely to head back towards 0.8035 supply zone. On the downside, 0.7960-55 area seems to have emerged as immediate support, which if broken could drag the pair towards 50-day SMA support near the 0.7930 region en-route the 0.7900 handle.