The AUD/USD pair gains traction traction for the fourth consecutive days and climbs to a monthly high. The pair builds on its recovery move from the 0.6680 region, or over a two-year low touched last week.
Spot prices have climbed to a fresh monthly high and are holding steady above the 0.6900 mark through the early European session.
Investors continued scaling back their expectations for a supersized Fed rate hike after several FOMC members said last week that they will likely stick to a 75 bps increase at the upcoming meeting. This was seen as a key factor behind the recent US dollar corrective pullback from a two-decade high, which, in turn, continued lending support to the AUD/USD pair.
Read Also- EURUSD Extends Recovery Above Parity Ahead of key US Data
Investors, however, seem convinced that the recent surge in US consumer inflation to a four-decade high will force the Fed to deliver a larger rate hike later this year. This, in turn, remains supportive of elevated US Treasury bond yields, which are helping limit deeper losses for the greenback and capping the AUD/USD pair, at least for the time being.
Market participants now look forward to the US economic docket, featuring the release of Existing Home Sales data later during the early North American session. Apart from this, the US bond yields should influence the USD and provide some impetus to the AUD/USD pair. Traders will also take cues from the broader risk sentiment to grab short-term opportunities.
Source- FxStreet
