AUD/USD remains depressed near 0.6700, fresh USD selling lends some support

• AUD/USD pulls back from a nearly two-week high touched earlier this Monday.
• An intraday recovery in the global risk sentiment lends some support to the pair.
• Bets for a less hawkish Fed prompt fresh USD selling and help limit the downside.
• Traders now look forward to the RBA minutes on Tuesday for short-term impetus.

The AUD/USD pair struggles to capitalize on its modest intraday gains and retreats from a nearly two-week high, around the 0.6730 area touched earlier this Monday. Spot prices, however, manage to rebound a few pips from the daily low and trade just below the 0.6700 round-figure mark heading into the North American session.

A solid rebound in the US equity futures turns out to be a key factor lending some support to the risk-sensitive Aussie amid the emergence of fresh selling around the US Dollar. Against the backdrop of a modest recovery in the global risk sentiment, a further slide in the US Treasury bond yields exerts some downward pressure on the safe-haven Greenback and acts as a tailwind for the AUD/USD pair.

The recent collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank - forced investors to scale back bets for a more aggressive policy tightening by the US central bank. In fact, the markets are now pricing in a greater chance of a smaller 25 bps lift-off at the highly-anticipated FOMC monetary policy meeting, starting this Tuesday, which continues to drag the US bond yields lower.

It is worth mentioning that the rate-sensitive 2-year US government bond last week recorded its biggest three-day slump since Black Monday in October 1987. This keeps the USD bulls on the defensive and helps limit the downside for the AUD/USD pair. That said, concerns about the contagion risk and the possibility of a full-blown global banking crisis could cap any optimism in the markets.

Traders might also refrain from placing aggressive directional bets and prefer to move to the sidelines ahead of the release of the Reserve Bank of Australia's (RBA) monetary policy meeting minutes, due during the Asian session on Tuesday. This will be followed by the FOMC decision on Wednesday, which will influence the USD and provide a fresh directional impetus to the AUD/USD pair.

Technical levels to watch