AUD/USD gathers strength to above as traders await US-China trade talks.

AUD/USD gains traction to around 0.6570 in Monday’s early Asian session.
US and China are expected to extend the trade truce by 90 days, said SCMP.
The Fed is anticipated to leave the interest rate unchanged on Wednesday.

The AUD/USD pair edges higher to near 0.6570 during the early Asian session on Monday. Optimism surrounding the US-China trade deal provides some support to the Australian Dollar (AUD) against the US Dollar (USD). US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet on Monday in Stockholm.

The South China Morning Post reported, citing unnamed sources, that the world’s two largest economies are expected to extend their tariff truce by another three months. The US and China will not impose additional tariffs on each other during the extension. The current pause was to end Aug. 12. Positive developments surrounding US-China trade talks underpin the China-proxy Aussie, as China is a major trading partner of Australia.

On the USD’s front, the US Federal Reserve (Fed) is expected to hold its benchmark interest rate steady between 4.25% and 4.50% at its July meeting on Wednesday. Traders will closely monitor the FOMC press conference for any signs that rate cuts may start in September.

Markets have priced in nearly a 62% odds of a rate cut on September 1, according to the CME Group’s FedWatch tool. Any hawkish remarks from the Fed officials could lift the Greenback and cap the upside for the pair.