AUD/USD holds onto gains near 0.6670 as US Dollar declines further

AUD/USD clings to gains near 0.6670 amid weakness in the US Dollar. The Fed is certain to cut interest rates in the policy meeting on Wednesday. Australian Unemployment Rate is expected to have remained steady at 4.25 in August.

AUD/USD Technical Overview

The AUD/USD trades firmly near its Monday’s high around 0.6670 during the European trading session on Tuesday. The Aussie pair demonstrates strength as the US Dollar (USD) falls further due to firm expectations that the Federal Reserve (Fed) will start unwinding the restrictive monetary policy stance from its monetary policy outcome on Wednesday.

Fundamental Overview

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, posts a fresh seven-week low near 97.00.

According to the CME FedWatch tool, there is a 96% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.00%-4.25%, while the rest support a bigger reduction of 50 bps.

Fed dovish expectations have been boosted by deteriorating United States (US) labor market conditions in the wake of tariffs imposed by President Donald Trump. Lately, a majority of Fed members, including Chair Jerome Powell, argued in favor of monetary policy expansion, citing downside employment risks.

Meanwhile, investors await the US Retail Sales data for August, which will be published at 12:30 GMT. The Census Bureau is expected to show that Retail Sales, a key measure of consumer spending, is estimated to have grown at a moderate pace of 0.2%.

In Australia, investors await the employment data for August, which is scheduled for Thursday. The Unemployment Rate is seen steady at 4.2%. The economy is expected to have added 21.2K fresh workers, slightly lower than the prior reading of 24.5K.