AUD/USD Pares Gains Ahead of Inflation Data and Fed Decision

AUD/USD pulled back to around 0.6990 on Monday after briefly climbing to an intraday high of 0.7011 during the Asian session, but remained above Friday's closing level as investors positioned themselves ahead of Australia's key inflation data and the US Federal Reserve's upcoming monetary policy announcement.

Risk appetite improved after the United States and Iran agreed to pause hostilities, easing geopolitical concerns and triggering a sharp decline in global Oil prices. West Texas Intermediate (WTI) crude traded near $83.70 per barrel after falling more than 7%, reducing fears that higher energy costs would intensify inflationary pressures worldwide.

The drop in Oil prices also tempered expectations of an immediate Federal Reserve rate hike, providing modest support to growth-sensitive currencies such as the Australian Dollar.