AUD/USD retreats further from 3-week tops, reverses Friday’s positive move

The AUD/USD pair refreshed daily lows, around the 0.6760 region during the early European session on Monday and erased a major part of the previous session's goodish move up to three-week tops.
 
Despite a positive outcome from the much-hyped US-China trade negotiations, the pair failed to capitalize on last week's bullish move and met with some fresh supply on the first day of a new trading week amid a modest pickup in the US Dollar demand.

Fading trade optimism/weaker Chinese trade data weigh

It is worth reporting that on Friday the US and China announced a roadmap to a phase 1 agreement, which included the suspension of new US tariff planned for this week and a commitment from China to buy more US agricultural products.
 
However, some renewed USD buying interest, supported by some follow-through uptick in the US Treasury bond yields, turned out to be the only factor that kept a lid on any further move up, rather prompted some fresh selling around the major.
 
This coupled with weaker-than-expected trade data from China, showing the sharpest drop in imports since 2016, further undermined demand for the China-proxy Australian Dollar and collaborated to the pair's intraday slide on Monday.
 
Meanwhile, a slight deterioration in the global risk sentiment, as depicted by sliding equities, also did little to lend any support to perceived riskier currencies – like the Aussie – amid relatively thin liquidity conditions on the back of a holiday in the US.
 
It will now be interesting to see if the pair is able to attract any buying interest or the current pullback marks the end of the recent bounce from multi-year lows and the resumption of the prior/well-established bearish trend amid fading trade optimism.

Technical levels to watch