AUD/USD steadies below 0.7700, on track to post lowest daily close in 12 days

The AUD/USD pair dropped toward 0.7700 during the European trading hours and extended its slide in the second half of the day to a fresh 11-day low of 0.7674. At the moment, the pair is down 0.37% on the day at 0.7682 and remains on track to post its lowest daily close since June 3.

Earlier in the day, the cautious tone seen in the Reserve Bank of Australia's June meeting minutes made it difficult for the AUD to find demand. Assessing the RBA's publication, "the RBA minutes noted it would be premature to bring QE to an end," noted TD Securities analysts. “Our call is for the RBA to deliver another A$50bn in QE over 6 months. At the same time, however, we think RBA may also seek more flexibility."

Focus shifts to FOMC policy meeting

On the other hand, the data from the US revealed that the Producer Price Index for final demand rose to 6.6% on a yearly basis in May from 6.2% in April, surpassing the market consensus of 6.3%. Additionally, the US Census Bureau reported that Retail Sales in May declined by 1.3% following April's growth of 0.9% (revised from 0%). 

Following the mixed data, the US Dollar Index (DXY) climbed to a monthly high of 90.67 but struggled to preserve its bullish momentum with investors refraining from taking large positions ahead of FOMC's policy announcements on Wednesday.

Previewing this event, "the Federal Reserve is set to release updated forecasts, which are set to trigger the initial market reaction, potentially one that is dollar positive," said FXStreet analyst Yohay Elam. "Fed Chair Powell could dampen such gains with caution, especially if rejects any early withdrawal of stimulus."

Technical levels to watch for