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The volatility in the US Dollar Index (DXY) during the Asian session prompted a surge in the AUD/USD pair, which is now trading near 0.6550. Wednesday will see the publication of the Australian monthly Consumer Price Index (CPI) (April) data, which is expected to keep the Australian dollar active.

S&P500 futures have pared substantial gains in the Asian session as investors fret that volatility will remain elevated as US markets reopen following a long weekend. Investors in the United States are anticipated to react strongly to weekend events such as the approval of a debt-ceiling increase for two years and robust consumer spending, which has boosted expectations of a prolongation of the Federal Reserve's (Fed) policy-tightening cycle.

The US Dollar Index (DXY) has fallen below 104.20 as investors anticipate that an increase in the US debt ceiling will force credit rating agencies to downgrade the US economy's long-term credibility.

In the meantime, the USD Index is not being supported by the Fed's rumored intention to increase interest rates further. Despite higher interest rates from the Federal Reserve and easing labor market conditions, consumer expenditure in the United States has rebounded significantly. Fed Chair Jerome Powell may be compelled to raise interest rates further if he observes persistent inflation in the United States.

Going forward, Australia's inflation will continue to be a focal point. Inflation in Australia is anticipated to increase to 6.4% from the previous reading of 6.3%. Aside from that, the focus will remain on Reserve Bank of Australia (RBA) Governor Philip Lowe's speech. RBA For the June meeting, Lowe is anticipated to provide interest rate guidance.

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