- US Dollar Index finds support near the 96 handle on Monday.
- Chicago Fed's National Activity Index improves slightly in May.
- Fed rate cut expectations likely to continue to dominate the market action.
After gaining traction in the early trading hours of the Asian session and advancing to its highest level in more than 10 days at 0.6961, the AUD/USD pair has gone into a consolidation phase and is now fluctuating in a tight range near the 0.6950 mark.
The lack of significant macroeconomic drivers on Monday allowed investors to continue to price the Fed rate cut expectations and weighed on the greenback. The US Dollar Index, which lost more than 1% last week, extended its slide today and touched its lowest level since mid-March at 95.99, keeping the pair's bullish momentum intact. According to the CME Group FedWatch, markets are pricing a 38.5% probability of a 50 basis points sate cut in July vs 61.5% probability of a 25 basis points cut.
The only data from the U.S. today showed that the Chicago Fed's National Activity Index improved slightly to -0.05 in May from -0.48 in April but did little no nothing to help the greenback gather strength. At the moment, the DXY is virtually unchanged on a daily basis at 96.10.
In the Asian session on Tuesday, the Reserve Bank of Australia's Assistant Governor, Michele Bullock, will be delivering a speech. Later in the day, FOMC Chairman Powell's and FOMC members Bostic and Bullard's remarks will be looked upon for fresh catalysts.
Technical levels to watch for
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