Anna 
The AUD/USD pair navigates without a clear intraday direction as the new week kicks off, oscillating between modest gains and minor losses during the first half of the European session. Presently, spot prices hover around the 0.6520-0.6525 range, showing little change for the day and remaining within proximity of a nearly three-week low recorded last Thursday.
Traders are adopting a cautious approach, preferring to stay on the sidelines ahead of Federal Reserve (Fed) Chair Jerome Powell’s upcoming congressional testimony scheduled for Wednesday and Thursday. Powell’s remarks are anticipated to offer insights into the potential path of interest rates, influencing the trajectory of the US Dollar (USD). Additionally, crucial US macro data, including the eagerly awaited Nonfarm Payrolls (NFP) report on Friday, is expected to provide fresh directional impetus for the AUD/USD pair.
The aftermath of last Friday’s underwhelming release of the US ISM Manufacturing PMI and the University of Michigan’s Consumer Sentiment Index, coupled with less-hawkish comments from Fed officials, reinforces expectations of a June rate cut. This places USD bulls on the defensive, creating a favorable environment for the AUD/USD pair. Furthermore, optimism surrounding additional stimulus measures from China contributes to supporting the Australian Dollar (AUD).
Despite these positive factors, a softening in global risk sentiment, reflected in a subdued tone in US equity futures, restrains traders from making aggressive bullish bets on the risk-sensitive Aussie. Additionally, the growing consensus that the Reserve Bank of Australia (RBA) is unlikely to pursue further rate hikes, fueled by lackluster domestic inflation figures and weaker Retail Sales data last week, acts as a limiting factor for the upside potential of the AUD/USD pair.
As traders await confirmation of a near-term bottom and a decisive upward move, it is advisable to exercise caution. Monday’s lack of significant US macro data puts the spotlight on US bond yields, which will play a crucial role in determining USD demand. The broader risk sentiment will also impact USD price dynamics, presenting short-term opportunities within the AUD/USD pair. Investors are poised to respond to key developments in the coming days as they navigate through the intricate interplay of economic indicators and global market sentiment.
