AUD/USD remains depressed below mid-0.7300s

• AUD/USD struggled to gain any meaningful traction and was pressured by a combination of factors.
• Rising bets for an earlier Fed taper, rallying US bond yields underpinned the USD and capped gains.
• COVID-19 jitters weighed on investors’ sentiment and further benefitted the safe-haven greenback.

The AUD/USD pair remained on the defensive below mid-0.7300s through the first half of the European session, albeit has managed to hold its neck above daily swing lows.

A combination of factors failed to assist the AUD/USD pair to capitalize on its modest intraday bounce from the 0.7330-25 region, or over one-week lows touched earlier this Monday. COVID-19 jitters overshadowed stronger Chinese inflation figures and did little to provide any meaningful impetus to the China-proxy Australian dollar. Apart from this, the underlying bullish sentiment surrounding the US dollar further held traders from placing any bullish bets around the major.

Friday's blockbuster US monthly jobs report fueled speculations that the Fed could begin tapering its asset purchases later this year. Investors also seem to have started pricing in the possibility of higher interest rates as soon as 2022, which was reinforced by an extension of the positive move in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond shot beyond the 1.30% threshold, which, in turn, continued acting as a tailwind for the USD.

Meanwhile, concerns that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery weighed on investors' sentiment. This was evident from the risk-off impulse in the markets, which further benefitted the greenback's safe-haven status and capped the upside for the perceived riskier aussie. Nevertheless, the fundamental backdrop seems tilted in favour of bearish traders and supports prospects for a further depreciating move for the AUD/USD pair.

There isn't any major market-moving economic data due for release from the US on Monday. Hence, traders might take cues from scheduled speeches by Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin. This, along with the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities around the AUD/USD pair.

Technical levels to watch