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The AUD/USD pair is holding firm near 0.6510 in early Asian trade on Monday, buoyed by a weaker US Dollar (USD). Soft US economic data has strengthened expectations of a Federal Reserve (Fed) rate cut in September, weighing on the Greenback. Traders now turn their attention to Thursday’s preliminary US S&P Global PMI release for fresh cues.

In the US, consumer sentiment deteriorated in early August, with the University of Michigan index dropping to 58.6 from 61.7 in July, below market forecasts of 62.0. The decline in confidence pressured the USD. At the same time, retail sales rose 0.5% in July, easing from June’s 0.9% gain but meeting expectations. According to the CME FedWatch tool, markets are now pricing in a 93% probability of a 25 bps Fed rate cut next month.

On the downside for the Australian Dollar (AUD), weak Chinese data poses a risk. The National Bureau of Statistics (NBS) reported July retail sales rising 3.7% YoY, missing the expected 4.6% and slowing from 4.8% in June. Industrial production grew 5.7% YoY, below the prior 6.8% but above the 2.7% estimate. As China is Australia’s largest trading partner, signs of slower Chinese growth may weigh on the Aussie.

Domestically, the AUD remains supported by resilient labor market conditions. Australia’s unemployment rate eased to 4.2% in July from 4.3% previously, in line with expectations. The economy added 24.5K new jobs during the month, broadly matching forecasts.

AUDUSD D1 Chart

AUDUSD has been trading within the range between 0.642 and 0.662 since June 2025, major key levels to watch on the daily chart are: Support: 0.642 Resistance: 0.662

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