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   “¢   Opens with a weekly bearish gap amid escalating US-China trade tensions.
   “¢   Positive US bond yields continue to underpin USD and exert additional pressure.

The AUD/USD pair stalled its intraday rebound near 0.7280 and dropped to fresh session lows in the last hour, retreating farther from Friday’s over three-week tops.

Having failed to clear 50-day SMA hurdle, near the 0.7300 handle on Friday, the pair opened with a bearish gap at the start of a new trading week amid signs of escalating trade tensions between the world’s two largest economies.

The new US tariffs on $200 billion worth of Chinese imports and retaliatory China tariffs on $60 billion of US products took effect on Monday and was seen as one of the key factors weighing on the China-proxy Australian Dollar.

This coupled with a follow-through US Dollar uptick, supported by the recent upsurge in the US Treasury bond yields, exerted some additional downward pressure and further collaborated to the pair’s fall back to mid-0.7200s.

Moving ahead, this week’s key focus will be on the highly anticipated FOMC decision, scheduled to be announced on Wednesday. This along with any fresh trade-related news/developments would help investors determine the pair’s next leg of directional move.

Technical levels to watch

Any further weakness is likely to get extended towards the 0.7215-10 region en-route the 0.7200 handle. On the upside, the 0.7280 region now seems to act as an immediate resistance and is closely followed by 50-DMA hurdle near the 0.7300 round figure mark.