AUD/USD revisits almost 10-month high around 0.6620 as US Dollar underperforms

AUD/USD jumps to near 0.6620 as the US Dollar underperforms its peers. Investors expect the Fed to cut interest rates in the policy meeting next week. The next trigger for the US Dollar will be the release of the US NFP benchmark revision report.

AUD/USD Technical Overview

The AUD/USD pair reclaims the 10-month around 0.6620 during the European trading session on Tuesday. The Aussie pair strengthens as the US Dollar (USD) underperforms its peers amid firm expectations that the Federal Reserve (Fed) will cut interest rates in the policy meeting next week.

Fundamental Overview

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, posts a fresh six-week low near 97.25.

According to the CME FedWatch tool, there is an 11.6% chance that the Fed will cut interest rates by 50 basis points (bps) to 3.75%-4.00%, while the rest point a standard 25-bps interest rate reduction.

Fed dovish bets have intensified amid deteriorating United States (US) labor market conditions in the wake of tariffs imposed by President Donald Trump. The US Nonfarm Payrolls (NFP) report for August showed on Friday that the economy added 22K fresh workers, significantly lower than expectations of 75K, and the prior reading of 79K.

For fresh cues on the broader status of the labor market, investors await the release of the NFP benchmark revision report, which will be published at 14:00 GMT.

Investors will pay close attention to the US NFP benchmark revision report as it will show deviation in cumulative monthly figures for the year ending March 2025.

Meanwhile, the Australian Dollar (AUD) outperforms its peers as the market sentiment remains favorable for riskier assets. Going forward, investors will focus on China’s Consumer Price Index (CPI) data for August, which will be released on Wednesday.