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AUD/USD surrenders early modest gains to 0.7200 handle, turns neutral

   •  A modest USD uptick keeps a lid on any meaningful up-move.
   •  Fed rate hike uncertainty might continue to help limit downside.
   •  Traders eye US housing market data for short-term impetus.

The AUD/USD pair struggled to extend its intraday up-move and has now retreated around 15-20 pips from the Asian session tops, around the 0.7200 handle.

The US Dollar stalled its recent corrective slide from 1-1/2 year tops set on Friday and was seen as one of the key factors failing to assist the pair to build on the previous session's modest uptick. The prevalent risk-off mood, hit hard by the overnight rout on Wall Street, underpinned the greenback's perceived safe-haven status and exerted some downward pressure on the major.

The downside, however, remained cushioned, at least for the time being, amid growing speculations that the Fed is likely to pause its rate hike cycle in 2019, especially after the recent dovish comments by various FOMC officials, including the Fed Chair Jerome Powell.

Hence, the key focus will be on the latest FOMC monetary policy update, scheduled to be announced during the US trading session on Wednesday. The central bank's forward guidance (dot-plot) will guide the USD's near-term trajectory and eventually provide some fresh directional impetus to the major.

Ahead of the key event risk, today's US economic docket, featuring the release of housing market data, will be looked upon for some short-term trading impetus during the early North-American session on Tuesday. Apart from this, the broader market risk-sentiment might further collaborate towards influencing the pair's momentum on Tuesday.

Technical levels to watch

Immediate support is pegged near the 0.7170-60 region, below which the pair is likely to accelerate the fall further towards challenging the 0.7100 handle. On the flip side, a sustained move beyond the 0.7200 handle might assist the pair to make a fresh attempt to clear 100-day SMA barrier, near the 0.7220 region, and aim towards testing the 0.7240-50 supply zone.

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