• AUD/USD kicks off the new week on a positive note and hits a fresh multi-month high.
• A combination of factors helps revive the USD demand and caps the upside for the pair.
• Traders look to the US ISM Services PMI for some impetus ahead of the RBA on Tuesday.

The AUD/USD pair climbs to its highest level since August 13 on the first day of a new week, albeit struggles to capitalize on the move beyond mid-0.6800s. The pair trims a part of its intraday gains and retreats to the 0.6800 mark during the first half of the European session.

A combination of factors assists the US Dollar to stage a modest recovery from over a five-month low touched earlier this Monday, which, in turn, acts as a headwind for the AUD/USD pair. Worries about a deeper global economic downturn overshadow the latest optimism over the easing of COVID-19 curbs in China. This is evident from a generally softer tone around the equity markets, which drives some haven flows towards the buck and weighs on the risk-sensitive Aussie. Apart from this, an intraday uptick in the US Treasury bond yields offers some support to the greenback.

The upbeat US monthly jobs report (NFP) released on Friday and an upside surprise in wages point to a further rise in inflationary pressures. The data validates Fed Chair Jerome Powell's forecast that the peak interest rate will be higher than expected and suggests that the US central bank will continue to tighten its monetary policy. This, in turn, is seen pushing the US Treasury bond yields higher. That said, the recent comments by several FOMC Officials support prospects for relatively smaller interest rate hikes by the US central bank, which might cap gains for the USD.

Traders might also refrain from positioning for a deeper corrective pullback for the AUD/USD pair as the focus now shifts to the Reserve Bank of Australia (RBA) meeting on Tuesday. Heading into the key central bank event risk, the US ISM Services PMI might provide some impetus to the AUD/USD pair, later during the early North American session on Monday. This, along with the US bond yields and the broader risk sentiment, will influence the USD price dynamics and further contribute to producing short-term trading opportunities around the AUD/USD pair.

Technical levels to watch