The Australian Dollar (AUD) started the week on the back foot, slipping below the 0.6500 level against the US Dollar (USD) during the New York session on Monday. The decline reflects a firmer Greenback, buoyed by rising Treasury yields and cautious investor sentiment ahead of a high-profile summit between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy in Washington.
The US Dollar Index (DXY) is trading near 98.14, modestly recovering from last week’s two-week low. While geopolitical risks have lent support to the USD, upside momentum remains limited amid firm expectations that the Federal Reserve (Fed) will deliver a 25 basis point rate cut at its September meeting.
The Trump-Zelenskyy meeting, also attended by key European leaders including UK Prime Minister Keir Starmer, French President Emmanuel Macron, and German Chancellor Friedrich Merz, follows last week’s Trump-Putin talks in Alaska. Although the Alaska summit ended without a ceasefire breakthrough, both sides agreed to pursue a long-term security framework involving multilateral guarantees, arms control, and international oversight. This shift toward broader diplomatic engagement has raised hopes for a more structured resolution to the conflict.
Meanwhile, the Australian Dollar remains pressured by the Reserve Bank of Australia’s (RBA) dovish policy stance. Earlier this month, the RBA cut its benchmark rate by 25 basis points to 3.60%, citing weak productivity growth, subdued household consumption, and a softer GDP outlook. Policymakers also left the door open for further easing if inflationary pressures continue to cool.
Still, the domestic labour market has shown resilience, with steady unemployment and stronger full-time hiring, suggesting some underlying economic stability. Looking ahead, traders will monitor Australia’s August Westpac Consumer Confidence Index on Tuesday, followed by the release of FOMC meeting minutes and Fed Chair Jerome Powell’s remarks at the Jackson Hole Symposium later in the week—both key drivers for USD sentiment.
Trade Idea:
AUD/USD remains vulnerable below 0.6500; selling on rallies toward 0.6520–0.6540 with a target near 0.6400 could be favored amid Fed-driven USD strength.