AUD/USD hangs near one-month low, just above mid-0.6800s amid bullish USD

• AUD/USD consolidates in a range near a one-month low touched earlier this Tuesday.
• A modest recovery in the equity markets offers support to the risk-sensitive aussie.
• Hawkish Fed expectations act as a tailwind for the USD and continue to cap the upside.

The AUD/USD pair struggles to gain any meaningful traction and seesaws between tepid gains/minor losses through the first half of the European session. The pair is currently placed in neutral territory, around the 0.6875 region, just a few pips above a one-month low touched earlier this Tuesday.

The US dollar pulls back from a two-decade high amid a softer tone surrounding the US Treasury bond yields. Adding to this, a goodish recovery in the global risk sentiment - as depicted by a positive turnaround in the equity markets - further underpins the safe-haven greenback. This turns out to be a key factor offering some support to the AUD/USD pair, through the attempted recovery move lacks bullish conviction.

Growing worries about a global economic downturn keep a lid on any optimistic move in the markets and act as a headwind for the risk-sensitive aussie. Furthermore, firming expectations that the Fed would continue to tighten its monetary policy to tame inflation should help limit any deeper USD corrective slide. The aforementioned factors should contribute to capping gains for the AUD/USD pair, warranting caution for bulls.

Investors might also be reluctant to place aggressive bets and prefer to move on the sidelines ahead of Fed Chair Jerome Powell's speech at the Jackson Hole symposium later this week. Investors will look for clues about the possibility of a 75 bps rate hike at the September FOMC meeting. This, along with important US macro data, will drive the USD demand and help determine the near-term trajectory for the AUD/USD pair.

In the meantime, Tuesday's US economic docket, featuring the flash PMI prints, New Home Sales data and Richmond Manufacturing Index might provide some impetus later during the early North American session. Apart from this, the broader risk sentiment could influence the USD price dynamics and allow traders to grab short-term opportunities around the AUD/USD pair.

Technical levels to watch