The Australian dollar (AUD) continued its bearish trend on Monday, likely in response to a less hawkish stance from the Reserve Bank of Australia (RBA), which left its interest rate unchanged at 4.35% on Tuesday.
The RBA's decision came as a surprise to markets, which were expecting a more decisive move, especially after last week's better-than-expected inflation data.
The Australian Treasury previously stated that inflation could return to the RBA's target range by the end of 2024, and is expected to reach 2.75% by mid-2025, which is in line with the central bank's goals.
Meanwhile, the US Dollar Index continues to strengthen as traders analyze Friday's key economic data and dovish comments from Federal Reserve (Fed) officials regarding interest rate cuts. However, a downward correction in US Treasury yields is possible, which could limit the dollar's gains, FX Street reports.
The US Dollar Index (.DXY), which tracks the greenback against a basket of global currencies, is at 105.32.
Looking ahead to next week, investors will focus on key US economic indicators such as the Producer Price Index (PPI) on Tuesday and the Consumer Price Index (CPI) and Retail Sales reports on Wednesday.
As such, the Australian dollar continues to fall on the back of the RBA's dovish decision, as the market awaits new data and commentary to understand further currency market trends.
The AUD/USD fell 0.02% to 0.6602, while the EUR/AUD rose 0.05% to 1.6326.
The AUD/JPY also fell by 0.02% to 102.81.
At the same time, the AUD/NZD rose by 0.16% to 1.0987.
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