The Australian Dollar gains as traders price in an 85.6% chance the Fed will hold rates steady in July after cooling US inflation data.
The AUD/USD pair climbed 0.12% to 0.6995 in early Asian trading, recovering from a weak open as the US Dollar weakened. The US Dollar Index (DXY) fell to 100.70, pressured by growing expectations the Federal Reserve will leave rates unchanged at its July meeting.
Markets now assign an 85.6% probability to a Fed pause, up from 65.8% last week, following June’s US Consumer Price Index data showing easing inflation. The Australian Dollar also found support after the People’s Bank of China kept its Prime Lending Rates unchanged.
Technically, AUD/USD holds above its 20-day exponential moving average at 0.6970, with the Relative Strength Index at 51.8, signaling modest near-term bullish momentum.