AUD/USD sees cushion around 0.6960 on weak DXY, Fed Powell in focus

• AUD/USD is expected to find bids around 0.6960 as the DXY loses appeal on lower PMI forecasts.
• Fed Powell’s speech will provide insights about the likely monetary policy action next month.
• An accommodative PBOC's policy has supported the antipodean.

The AUD/USD pair has witnessed some long liquidation after a sheer upside move right from the first tick recorded in the early Tokyo session. The major is expected to find support around 0.6960 as the US dollar index (DXY) has witnessed a steep fall. The asset has displayed a bullish open drive session and is expected to extend gains after violating the critical resistance of 0.6972.

The DXY is underperforming on lower forecasts of Purchase Managers Index (PMI) figures, which are due on Thursday. The Composite PMI is seen higher marginally to 53.5 from the prior print of 53.4. While the Manufacturing and Services PMIs are indicating a severe underperformance. The Services PMI is seen significantly lower at 49.1 against the prior print of 53.2. Also, the Manufacturing PMI is expected to shift lower to 54.7 from the former figure of 55.7.

This week, investors’ focus will also remain on the speech from Federal Reserve (Fed) chair Jerome Powell. It is highly likely that the Fed’s Powell will dictate the likely monetary policy action for July, which s due on Wednesday.

On the aussie front, a neutral stance on lending rates by the People Bank of China (PBOC) has supported the antipodean. It is worth noting that aussie is a leading trading partner of China. Therefore, an accommodative policy stance by the PBOC will spurt the aggregate demand and henceforth, more goods and services from the Australian economy.