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Following two consecutive weekly, monthly, and quarterly losses, AUD/USD begins the pivotal week with a cautious tone as it makes its way to 0.6660 after Friday's stellar run-up. This accurately reflects the market's apprehension in advance of Tuesday's crucial Reserve Bank of Australia (RBA) Monetary Policy Meeting. Also noteworthy are the Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes on Wednesday and the US Employment Report on Friday, not to mention China's Caixin Manufacturing PMI and the US ISM PMIs for June.

The previous day, however, the Aussie pair rose the most in two weeks after the Federal Reserve's (Fed) preferred inflation gauge prompted hawkish expectations from the US central bank with the smallest annual gain in six months.

In May, the US Personal Consumption Expenditure (PCE) Price Index came in at 0.3% MoM and 4.6% YoY, compared to market expectations of 0.4% and 4.7% for monthly and annual prior readings.

Noteworthy is the fact that the disappointing US data bolstered equities and provided a further upside boost to the risk-barometer pair.

Moreover, expectations that China's massive investments will prevent the world's second-largest economy from losing its recovery momentum also contributed to the Aussie pair's strength.

Alternatively, Fed Chair Jerome Powell's support for "two more rate hikes in 2023" combined with downbeat Aussie inflation data and PMIs to signal the RBA's halt in rate hikes, which weighed on the AUD/USD exchange rate.

Moreover, the AUD/USD pair is threatened by the market's lack of growth optimism and the concern that the RBA will not raise interest rates versus the Fed's upcoming rate increase. Nonetheless, Tuesday's RBA Interest Rate decision will be crucial to monitor, as the Australian central bank has surprised markets with two consecutive rate hikes.

China's Caixin Manufacturing PMI for June, expected to be 50.2 versus 50.9 previously, will precede the US ISM Manufacturing PMI for the same month, anticipated to rise to 47.2 from 46.9 previously, to guide the AUD/USD pair ahead of the RBA meeting on Tuesday.

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