AUD/USD remains stronger around 0.6200 after breaking its losing streak

• AUD/USD appreciates due to thin trading volumes ahead of the New Year holiday.
• The US Dollar remains subdued as the 10-year bond yield depreciates to 4.59%.
• The Australian Dollar gained support as the 10-year government bond yield rose to 4.50%, near its monthly highest.

The AUD/USD pair halts its five-day losing streak, trading around 0.6200 during the European hours on Monday. The pair appreciates as the US Dollar (USD) remains softer amid thin trading ahead of New Year's holiday, while US Treasury bond yields depreciate.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, trades around 108.00, with 2-year and 10-year yields on US Treasury coupons standing at 4.30% and 4.59%, respectively, at the time of writing.

The US Dollar may receive upward support from growing expectations of fewer rate cuts next year by the US Federal Reserve (Fed). Traders continue to digest the Fed's hawkish pivot. The Fed cut its benchmark interest rate by a quarter point at the December meeting, and the latest Dot Plots indicated two rate cuts next year.

Additionally, the Australian Dollar (AUD) finds support from an improved 10-year government bond yield, which is trading around 4.50%, its highest level in over a month. Meanwhile, the Reserve Bank of Australia (RBA) has reiterated its commitment to maintaining a "sufficiently restrictive" policy stance until inflation uncertainty diminishes and the 2-3% target range is achieved.

The RBA emphasized that its primary focus is bringing inflation back to target, relying on a data-driven approach for future rate decisions. The December meeting minutes highlighted growing confidence among central bank's policymakers in their ability to control inflation, although they acknowledged ongoing risks. Market expectations suggest a divided outlook, with some anticipating a 25 bps rate cut as early as February, while a full easing is more widely priced in by April.