AUD/USD holds key support of 0.6000 as US Dollar steadies

• AUD/USD stays above 0.6000, with the US Dollar striving to gain ground after Thursday's correction.
• The Fed is expected to pursue a gradual policy-easing path.
• Investors await Australian Q3 CPI data for fresh cues about the RBA's interest rate outlook.

The AUD/USD pair consolidates above the psychological support of 0.6000 in Friday's European session. The Aussie pair turns sideways as the US Dollar (USD) steadies after Thursday's corrective move. The US Dollar Index (DXY), which gauges Greenback's value against six major currencies, hovers near 104.00.

The downside in the US Dollar appears to be limited due to growing expectations that the Federal Reserve's (Fed) policy-easing approach would be more gradual than what was previously anticipated for the remaining year and that former US President Donald Trump will win national elections on November 5.

According to the CME FedWatch tool, traders are confident that the Fed will cut interest rates at a usual pace of 25 basis points (bps) in the November and December policy meetings. The Fed started the policy-easing cycle in September with a larger-than-usual size of 50 bps, pushing interest rates lower to 4.75%-5.00%.

On the political front, investors expect higher tariffs and lower taxes if Trump returns to the White House, which will force the Federal Reserve (Fed) to keep interest rates higher.

Meanwhile, the Australian Dollar (AUD) has underperformed against its major peers this month despite investors expecting the Reserve Bank of Australia (RBA) to leave its Official Cash Rate (OCR) at its current levels by the year-end. The latest upbeat employment data reinforced expectations that the RBA will not cut interest rates for the remainder of the year.

Going forward, investors will focus on the Australian Q3 Consumer Price Index (CPI) data, which will be published on Wednesday. Australian inflation grew by 1% in the second quarter of this year.