AUD/USD stable above 0.6650, ahead of US ISM PMI and RBA meeting on Tuesday

• The AUD/USD is trading in a tight range during the early hours of the European session on Monday.
• The rebound in USD demand is seen as a key factor limiting the pair’s upside.
• The fall seems limited pending the RBA on Tuesday and key US macro data this week.

The pair AUD/USD It struggles to find a firm direction on the first day of a new week and oscillates between tepid gains and minor losses during the early going of the European session. the pair moves just above the 0.6650 zonevirtually unchanged on the day, although it manages to stay comfortably above the nearly four-week low hit last Thursday.

He US dollar (USD) regains ground and reversing much of its fall on Friday, which in turn is seen as a key factor acting as a headwind for the AUD/USD pair. Data released on Friday in the US showed that PCE price index remains well above 2% target of the Federal Reserve and supports the prospects for further tightening of the Fed’s monetary policy. In addition, Fed Chairman Jerome Powell reiterated last week that borrowing costs may need to rise as much as 50 basis points before the end of this year. This continues to support high US Treasury yields, which continue to support the dollar and cap the pair’s upside.

Apart of this, concerns about a global economic downturn, especially in China, further contribute to limiting the rise of the Australian dollar. Official data released by China’s National Statistics Office (NSO) on Monday have shown that the China’s Caixin manufacturing PMI came in at 50.5 in June, versus 50.2 expected. However, this figure is lower than May’s 50.9 and it does not help alleviate fears of slowing growth in the world’s second largest economy. However, the AUD/USD decline remains supported, at least for now, as traders await important US macro data and the RBA decision.

The week begins with the publication of the US ISM Manufacturing PMI, which will be published during today’s American session. Then, on Tuesday, it will be known the Reserve Bank of Australia (RBA) monetary policy decision. However, attention will remain focused on Wednesday’s Federal Open Market Committee (FOMC) meeting minutes and the US monthly employment data, popularly known as Friday’s NFP report. This will play a key role in influencing the USD and provide a new directional boost to the AUD/USD pair.

AUD/USD technical levels to watch