AUD/USD climbs back closer to multi-week tops, comfortable above mid-0.6800s

• Escalating geopolitical tensions in the Middle East exerted some pressure earlier this Monday.
• US-China trade optimism continues to underpin the Aussie and helped regain some traction.
• The upside is likely to remain limited ahead of RBA minutes on Tuesday and FOMC meeting.

The AUD/USD pair quickly reversed the weekly bearish gap opening, albeit struggled to extend the momentum and remained well within a broader trading range held over the past one-week or so.
 
After last week's repeated failures ahead of the 0.6900 handle, the pair opened with a mild bearish gap at the start of a new trading week in reaction to escalating geopolitical tensions in the Middle East. The weekend attacks on Saudi Arabian refining facilities triggered a fresh wave of the global risk-aversion trade and weighed on perceived riskier currencies - like the Australian Dollar.

Trade optimism attract some dip-buying

However, the recent optimism over the resumption of US-China trade talks and encouraging trade-related developments continued attracting some dip-buying interest around the China-proxy Aussie, which coupled with a subdued US Dollar price action - despite a follow-through uptick in the US Treasury bond yields - remained supportive of the pair's intraday uptick of around 20-pips.
 
The up-move seemed rather unaffected by the disappointing Chinese macro releases, showing that Chinese retail sales rose 7.5% year-on-year rate in August as compared to 7.9% expected and industrial production slowed further to 4.4% in August from 4.8% in July.
 
Meanwhile, bulls seemed lacking any strong conviction, rather refrained from placing any aggressive bets and preferred to wait on the sidelines heading into the upcoming key event risk - the highly anticipated FOMC monetary policy meeting later this week on September 17-18.
 
The Fed is widely expected to cut interest again on Wednesday, though opinions on aggressive easing remain divided and should lead to some unusual volatility during the second half of this week/assist investors to determine the pair's next leg of a directional move.
 
In the meantime, the broader market risk sentiment and the USD price dynamics might be looked upon for some short-term trading opportunities amid absent relevant market-moving US economic releases and ahead of the RBA policy meeting minutes, due to be released during the Asian session on Tuesday.

Technical levels to watch