AUD/USD Recovers Further From Monthly Low As China Holds LPR Steady For The Sixth Month 

• AUD/USD cross witnessed some buying on Monday and extended the sharp rebound from the vicinity of the 0.68121 level
• Rising treasury bond yields amid expectations that the Federal Reserve will stick to aggressive interest rates offer support to the safe-haven greenback 
• China Holds the LPR rate steady for the sixth month, in turn, undermines the Aussie dollar 

AUD/USD cross attracted some buying during the early Asian session extending the sharp rebound from the vicinity of 0.68121 level/3-week-low touched last Friday. As per press time, the shared currency is up over 10 pips for the day and looks set to maintain its bid tone heading into the European Session.

A fresh leg up in the U.S. Treasury Bond yields and a softer risk tone supported the safe-haven greenback. Apart from this, the underlying bullish solid sentiment surrounding the U.S. Dollar kept the U.S. Dollar bulls on the defensive and acted as a headwind for the AUD/USD pair. The U.S. Dollar index (DXY), which measures the value of USD against a basket of currencies, was up 0.18% at $104.060 in early Asian trade on Monday, buoyed by a strong run of economic data out of the United States that traders bet will keep the Federal Reserve on its monetary policy tightening path for longer than initially expected.

A slew of data from the world's largest economy in recent weeks pointed to a still-tight labour market, sticky inflation, robust retail sales growth, and higher monthly producer prices have raised market expectations that the U.S. central bank will stick to aggressive interest rate hikes to tame inflation in the U.S. Apart from these speeches from several top FED officials also supported the view that the U.S. Central Bank will have to hike interest rates to cool the economy. Fed Funds Futures tied to the Fed's policy are now pricing that the U.S. central bank will raise interest rates at least twice. The futures contracts pricing now shows traders are betting heavily that the Fed will raise rates by a quarter of a percentage point at each of its meetings in March and May.

That said, the prevalent cautious mood depicted by fears of a pending recession also tempered investors' appetite for risky assets, which saw flows driven towards the greenback. This was evident from a weaker tone around the equity markets. Further lifting the greenback was the news of China's decision to hold its LPR rate steady for the sixth month. As widely expected, the People's Bank of China (PBOC) left its key lending rates unchanged for the sixth straight month at February fixing. The one-year loan prime rate (LPR), used for corporate and household loans, was kept intact at 3.65%; while the five-year rate, a reference for mortgages, was maintained at 4.3%.

As we advance in the absence of any significant economic news data from both dockets (The U.S. markets are closed for the Washington Birthday holiday), the U.S. bond yields and the broader market risk sentiment will continue to influence the U.S. dollar and allow traders to grab some trading opportunities around the AUD/USD pair.

Technical Outlook: Four-Hours AUD/USD Price Chart 

Price broke above the 0.68873 resistance level from a technical standstill but lacked some follow-through buying and ended up retreating below the aforementioned level. If the price manages to pierce through this level in the coming sessions, buying interest could gain momentum and push up the price towards retesting the key resistance level plotted by a two-week downward sloping trendline extending from early February 2023 swing high. A convincing break above this level (bullish price breakout) will pave the way for aggressive technical buying around the AUD/USD pair.

On the flip side, if dip-sellers and technical traders jump back in and trigger a bearish reversal, initial resistance appears at the 0.68693 support level. If sellers manage to breach this floor, it will pave the way for a drop toward retesting the key support level plotted by a two-week downward-sloping trendline extending from the early February 2023 swing low. Sustained weakness below this level (bearish price breakout) will pave the way for aggressive technical selling around the AUD/USD pair.