AUD/USD finds interim support near 0.6550 as US Dollar comes under pressure

• AUD/USD gauges temporary support near 0.6550 as the US Dollar edges down.
• The US core PCE data will guide forward action in the FX domain.
• Australian monthly CPI is anticipated to accelerate to 3.5% from 3.4% in December.

The AUD/USD discovers support near 0.6550 in the European session on Monday. The sell-off move in the Aussie asset has stalled as the US Dollar drops. The US Dollar Index (DXY) corrects to near 103.76 as hopes of the Federal Reserve (Fed) pivoting to rate cuts are imminent.

S&P500 futures remain muted in the European session, indicating a sideways trend. Investors need fresh insights for rate cuts by the Fed. This week, the United States core Personal Consumption Expenditure (PCE) price index data for January will influence market expectations for rate cuts.

Investors anticipate the monthly core PCE inflation data rose by 0.4% in January from 0.2% growth in December. Annually, the economic data is anticipated to have come out at 2.8% against 2.9% in December.

The consumer price inflation data for January has eased expectations for early rate cuts by the Fed. Last week, Fed Governor Christopher Waller said there is no need to hurry for rate cuts. The risks of reducing interest rates too soon are higher than delaying them.

Meanwhile, the Australian Dollar will be guided by the monthly Consumer Price Index (CPI) data for January, which will be published on Wednesday. Economists have projected that the inflation data rose slightly to 3.5% from the former reading of 3.4%. Sticky inflation data would prompt expectations of one more interest rate hike by the Reserve Bank of Australia (RBA).