AUD/USD advances toward mid-0.7100s as DXY slumps to 93.50

• AUD/USD edges higher in early American session on Monday.
• Selling pressure surrounding USD remains intact at the start of the week.
• Investors largely ignore upbeat macroeconomic data releases from US.

The AUD/USD pair closed the fifth straight week in the positive territory last week and continued to edge higher on Monday. After staying in a consolidation phase around 0.7130 during the European trading hours, the pair gained traction and rose to a daily high of 0.7150 in the early American session. As of writing, AUD/USD was up 0.5% on the day at 0.7138.

USD selloff continues ahead of FOMC meeting

The USD’s market valuation remains as the primary driver of AUD/USD’s movements on Monday. The US Dollar Index, which tracks the USD’s performance against a basket of six major currencies, slumped to its worst level in more than two years at 93.48 on Monday.

Heightened worries over an inconsistent recovery amid rising coronavirus cases in the US cause investors to price a long-term commitment by the Federal Reserve to an expansionary policy. On Wednesday, the FOMC will announce July’s policy meeting and release its policy statement. 

Earlier in the day, the US Census Bureau reported that Durable Goods Orders in the US rose by 7.3% in June. Additionally, the Dallas Fed Manufacturing Index improved from -6.1 in June to -3 in July. Nevertheless, these data were largely ignored by market participants. 

On the other hand, any further escalation in the US-China tensions could weigh on the AUD and limit the pair’s upside in the near-term. 

Technical levels to watch for