AUD/USD flirts with session lows, around 0.7330 region

• Disappointing Chinese macro data prompted some fresh selling around AUD/USD on Monday.
• Reduced bets for early Fed tapering undermined the USD and might help limit the downside.

The AUD/USD pair remained depressed heading into the European session and was last seen hovering near the lower end of its daily trading range, around the 0.7335-30 region.

A combination of factors failed to assist the AUD/USD pair to capitalize on Friday's positive move, instead prompted some fresh selling on the first day of a new trading week. Worries that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery continued weighing on investors' sentiment. This, in turn, was seen as a key factor that acted as a headwind for the perceived riskier Australian dollar.

The market worries were further fueled by disappointing Chinese macro data, which exerted some additional pressure on the China-proxy aussie. In fact, China's Retail Sales, Industrial Production and Fixed Asset Investment all missed market expectations, pointing to a surprisingly sharp slowdown in the world's second-largest economy. That said, a subdued US dollar price action might help limit any further losses for the AUD/USD pair.

As investors looked past blockbuster US jobs report for July, last week's softer US consumer inflation figures, along with a sharp fall in the US consumer confidence forced investors to scale back their bets for an early tightening of the policy by the Fed. This was evident from the ongoing decline in the US Treasury bond yields, which, in turn, kept the USD bulls on the defensive through the early part of the trading action on Monday.

There isn't any major market-moving economic data due for release from the US. Hence, the focus will remain on the US monthly Retail Sales figures and Fed Chair Jerome Powell's speech on Tuesday. Apart from this, the release of the FOMC meeting minutes on Wednesday will play a key role in influencing the USD price dynamics. This, in turn, should assist investors to determine the next leg of a directional move for the AUD/USD pair.

In the meantime, the broader market risk sentiment and the US bond yields, will drive demand for the safe-haven USD and provide some short-term trading impetus to the AUD/USD pair.

Technical levels to watch