AUD/USD hangs closer to Friday’s near four-month lows

The AUD/USD pair maintained its bearish bias through mid-European session and is now headed back to the lower end of daily trading range.

The pair on Monday came under some renewed selling pressure after disappointing domestic data that showed building permits slumped 13.4% in March and negated positive reading for the April NAB business confidence survey. 

Adding to this, a drop in Chinese import data, leading to widening of trade surplus, further collaborated to the bearish sentiment surrounding the China-proxy Australian Dollar. Dismal Chinese trade data also weighed on commodity prices, especially copper, and prompted additional selling pressure around commodity-linked currencies - like the Aussie. 

   •  China: April trade data signals softening momentum – ANZ

With early optimism, led by Emmanuel Macron's win against anti-EU far-right candidate Marine Le Pen in the French Presidential election taking a backseat, a fresh wave of global risk-aversion, further reaffirmed by a slide in the US treasury bond yields was seen driving investors away from riskier / higher-yielding currencies, including the Australian Dollar. 

With a relatively thin US economic docket, featuring the only release of Labor Market Conditions Index, traders are likely to take clues from St. Louis Fed President James Bullard comments, if any, on the Fed's monetary policy outlook. Against the backdrop of growing Fed rate-hike expectations, hawkish comments could aggravate the selling pressure and pave way for continuation of the pair's near-term downward trajectory.

   •  US economy to demonstrate that the headwinds were transitory - BBH

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes : "In the 4 hours chart, technical indicators have corrected oversold conditions, but are also developing below their mid-lines, whilst the 20 SMA maintains a strong bearish slope a few pips above the current level. April's low at 0.7430 is not the immediate resistance, with chances of further short term advances on a break above it. Nevertheless, the risk will remain towards the downside as long as the pair holds below the 0.7500 threshold."