Australian currency - At the end of this month, the prospect of further tightening by the Federal Reserve (Fed) continues to support the rise in US Treasury bond yields and helps the US Dollar (USD) attract interest from some buyers on the first day of the new week.

In fact, the USD Index (DXY), which measures the value of the US Dollar against a basket of currencies, managed to recover some of the large decline that occurred on Friday and reached a new monthly low. This became a key factor that acted as a driver for the AUD/USD currency pair.

However, the interest in taking significant long positions against the USD may be hindered by the decline in bets on further rate hikes by the Fed after the expected meeting in July.

Investors seem confident that the US central bank will ease its hawkish policy stance sooner than expected, and this expectation was triggered by the somewhat unimpressive US employment report on Friday. The report showed that the US economy added only a small number of jobs in the last 2-1/2 years in June.

From the fundamental background mentioned above, it appears that the least resistant path for the AUD/USD pair is upward, although concerns about China's economic conditions continue to be a drag on the Aussie currency as a proxy for China.

These concerns were triggered by weaker inflation numbers from China, with the main CPI showing a 0.2% decline in June and the annual inflation rate remaining flat. Additionally, the Producer Price Index (PPI) also saw a 5.4% YoY decrease during the reporting period.

During this period, in the absence of significant economic data releases from the US, traders on Monday will be watching Fed Governor Michael Barr's speech and following the movements in US bond yields, which could influence the movement of the US Dollar and provide some impetus to the AUD/USD pair. However, attention remains focused on the upcoming release of the latest US consumer inflation data on Wednesday. This data will play an important role in influencing demand for the US Dollar in the near term.

Warning!

This analysis is based on fundamental and technical perspectives from reliable sources, and it is not intended as advice or an invitation to act. Always remember that this content aims to enrich the reader's information. Always conduct independent research regarding other forex information to serve as a reference for your trading decisions.

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