AUD/USD pressured by stronger US Dollar, focus turns to Trump-Zelenskyy talks

The Australian Dollar (AUD) is losing ground against its US counterpart to kick off the week, with the AUD/USD pair slipping below the 0.6500 mark during the New York session on Monday. The move reflects a firmer US Dollar (USD), supported by rising Treasury yields and cautious market sentiment as a high-stakes meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy gets underway in Washington.

The US Dollar Index (DXY), tracking the Greenback against a basket of major currencies, is trading near 98.14, recovering modestly after hitting a near two‑week low last week. Traders are positioning defensively as geopolitical risks intensify, although the upside appears limited amid growing expectations of a 25 basis point rate cut by the Federal Reserve (Fed) at its September meeting.

The high‑stakes Trump-Zelenskyy summit, currently underway at the White House, is being attended by several European leaders, including UK Prime Minister Keir Starmer, French President Emmanuel Macron, German Chancellor Friedrich Merz, and European Commission President Ursula von der Leyen. The meeting follows last Friday’s Trump-Putin talks in Alaska, which concluded with no breakthrough as widely expected.

However, while the Alaska summit ended without a ceasefire deal, both leaders agreed in principle to pursue a longer-term security framework for Ukraine and its neighbors. The proposed framework, still in its early stages, reportedly includes multilateral security guarantees, arms control mechanisms, and international oversight aimed at laying the groundwork for a lasting peace arrangement. This shift from ceasefire efforts to broader diplomatic engagement has raised hopes of a more structured and enforceable resolution in the months ahead.

The Australian Dollar remains as the Reserve Bank of Australia (RBA) earlier this month lowered its benchmark interest rate by 25 basis points to 3.60%, citing weaker productivity trends and a subdued outlook for household consumption. The central bank also revised down its GDP forecasts and signaled that further easing could be warranted if inflation continues to moderate.

Meanwhile, recent labour market data showed signs of resilience, with steady unemployment and solid gains in full-time employment, suggesting underlying strength in hiring despite broader economic headwinds.

Looking ahead, traders will turn their attention to upcoming catalysts that could inject fresh volatility into the AUD/USD pair. On Tuesday, Australia will release the Westpac Consumer Confidence Index for August at 06:00 GMT, which will offer early insight into household sentiment amid rate cuts and slowing growth.

Globally, the focus shifts to the US side, with the FOMC meeting minutes due Wednesday, expected to shed light on policymakers' internal debate over the timing and scale of potential rate cuts. The week will culminate in a key macro event on Friday, when Federal Reserve Chair Jerome Powell speaks at the Jackson Hole Symposium. Markets will watch closely for any signals regarding the Fed’s inflation outlook and whether a 25 basis point cut in September is likely to materialize.