AUD/USD sits near multi-week top, bulls await sustained strength beyond 0.6600 mark

• AUD/USD regains positive traction and climbs back closer to a multi-week top touched on Friday.
• The RBA’s hawkish stance and a positive risk tone turn out to be key factors benefiting the Aussie. 
• China’s economic woes could act as a headwind ahead of the US inflation figures later this week.

The AUD/USD pair catches fresh bids during the early part of the European session and climbs back closer to a two-and-half-week top touched on Friday. Spot prices currently trade around the 0.6600 round-figure mark, with bulls looking to build on the momentum beyond the technically significant 200-day Simple Moving Average (SMA).

The Australian Dollar (AUD) continues to draw support from the Reserve Bank of Australia's (RBA) stance, showing readiness to hike interest rates further to combat still sticky inflation. In fact, RBA Governor Michele Bullock last week emphasized the need to stay vigilant about inflation risks and said that the central bank will not hesitate to tighten monetary policy again if needed. This, along with a generally positive tone around the equity markets, turns out to be another factor benefiting the risk-sensitive Aussie. 

The US Dollar (USD), on the other hand, struggles to attract any meaningful buying in the wake of bets for bigger interest rate cuts by the Federal Reserve (Fed). This provides an additional boost to the AUD/USD pair and remains supportive of the move up. That said, persistent worries about an economic downturn might hold back traders from placing aggressive bullish bets around the China-proxy AUD. Traders might also prefer to wait on the sidelines ahead of this week's release of US inflation figures.

The US Producer Price Index (PPI) is due on Tuesday, which will be followed by the Consumer Price Index (CPI) on Wednesday. This week's US economic docket also features the release of monthly Retail Sales figures. The crucial data will influence market expectations about the Fed's future policy decisions, which, in turn, will drive the USD demand and provide a fresh directional impetus to the AUD/USD pair. In the meantime, the fundamental backdrop favors bulls and supports prospects for additional gains.