AUD/USD flirts with session lows, around mid-0.7200s

The AUD/USD pair surrendered its modest intraday gains and was last seen hovering near daily lows, just above mid-0.7200s during the early European session.

The pair edged higher during the early part of the trading action on Monday, though the uptick lacked bullish conviction and lost steam near the 0.7280-85 region. A combination of factors helped revive the US dollar demand. This, along with a turnaround in the global risk sentiment, capped the upside for the perceived riskier aussie.

Investors seem convinced that the Fed would begin rolling back its massive pandemic-era stimulus as soon as November and raise interest rate in 2022. Apart from this, a modest pickup in the US Treasury bond yields acted as a tailwind for the USD, which further benefitted from a generally weaker tone around the equity markets.

Renewed concerns about China Evergrande Group's debt crisis tempered investors' appetite for perceived riskier assets. In the latest development, the debt-ridden developer will reportedly sell a 51% stake in the property unit for more than $5.1 billion to Hong Kong’s Hopson Development, though the news did little to soothe sentiment.

Moving ahead, there isn't any major market-moving economic data due for release from the US on Monday. Hence, the US bond yields will play a key role in influencing the USD price dynamics. Apart from this, the broader market risk sentiment might further provide some impetus to the AUD/USD pair ahead of the RBA policy decision on Tuesday.

Technical levels to watch