AUD/USD drops to session lows, nearing mid-0.7800s

   •  Extends overnight sharp retracement from 3-week tops.
   •  Weighed down by Trump's plan to impose new tariffs on China.

The AUD/USD pair maintained its offered tone through the early European session and refreshed session lows in the last hour. 

The pair extended overnight sharp retracement slide from 3-week tops, levels beyond the 0.7900 handle, and continued losing ground on Thursday, despite weaker sentiment around the US Dollar. 

The US President Donald Trump's plan to impose tariffs on China was seen one of the key factors weighing on the China-proxy Australian Dollar and exerted some downward pressure. 

Meanwhile, a modest USD rebound, coupled with a subdued action around commodity space, which tends to influence demand for commodity-linked currencies, including the Aussie, further collaborated to the pair's fall to session low level of 0.7860. 

The pair, however, has bee showing some resilience and managed to hold above mid-0.7800s, the lower end of its weekly trading range, and was being supported by fading Fed rate hike expectations. 

Later during the early NA session, the US economic docket, featuring the release of regional manufacturing indices and the usual initial weekly jobless claims, would now be looked upon for some fresh impetus.

Technical levels to watch

A follow-through weakness below mid-0.7800s is likely to accelerate the fall towards the 0.7825-20 region (100-day SMA), which is followed by the very important 200-day SMA support near the 0.7800 handle.

On the upside, momentum back above 0.7885 level could lift the pair back above the 0.7900 handle towards retesting 0.7915-20 supply zone en-route its next major hurdle near the 0.7945-50 region.