AUD/USD climbs back above mid-0.6900s, closer to one-month high amid renewed USD selling

• AUD/USD reverses an intraday dip on Monday and climbs back closer to a one-month high.
• A positive risk tone undermines the safe-haven USD and benefits the risk-sensitive aussie.
• Traders might refrain from placing aggressive bets ahead of this week’s key data/event risks.

The AUD/USD pair attracts dip-buying near the 0.6880-0.6875 region on Monday and gains traction through the first half of the European session. The momentum lifts spot prices to the 0.6955 region in the last hour, back closer to a one-month high touched on Friday.

The US dollar struggles to preserve/capitalize on the modest intraday gains and is last seen hovering just above its lowest level since July 5. A positive turnaround in the risk sentiment undermines the safe-haven USD and offers some support to the risk-sensitive aussie.

That said, any meaningful upside still seems elusive amid worries about a global economic downturn, which should keep a lid on any optimistic moves in the markets. Investors might also refrain from placing aggressive bets and prefer to wait for this week's key data/event risk.

A rather busy week kicks off with the release of the Conference Board's US Consumer Confidence Index on Tuesday. This will be followed by Australian quarterly inflation figures on Wednesday. The focus, however, will remain on the outcome of a two-day FOMC monetary policy meeting.

The Fed is scheduled to announce its interest rate decision during the US session on Wednesday and is universally expected to hike benchmark interest rates by 75 bps. Investors, however, will look for fresh clues about the central bank's near-term policy outlook, which could play a key role in influencing the USD.

Apart from this, the Advance US Q2 GDP report on Thursday will provide a fresh impetus to the AUD/USD pair and help determine the next leg of a directional move. In the meantime, the broader market risk sentiment will be looked upon for short-term trading opportunities.

Technical levels to watch