AUD/USD gains momentum above 0.6250 on RBA's cautious tone, China support

• AUD/USD drifts higher to 0.6280 in Monday's early Asian session. 
• Cautious RBA stance and China support underpin the Aussie. 
• The preliminary reading of the US S&P Global Manufacturing PMI for March will be the highlight later on Monday.

The AUD/USD pair gains momentum to near 0.6280 during the early Asian session on Monday. The Australian Dollar (AUD) edges higher as the Reserve Bank of Australia (RBA) keeps interest rates high and the Australian economy benefits from expected Chinese stimulus.

Analysts expect the RBA will hold rates steady next month after lowering borrowing costs for the first time in four years in February. Last week, RBA Assistant Governor (Economic) Sarah Hunter reiterated the central bank's cautious stance on rate reductions as they want to see further evidence that inflation is under control.

Additionally, fresh stimulus measures from the Chinese government boost the China-proxy Aussie, as China is a major trading partner to Australia. The ruling Chinese Communist Party's (CCP) central committee and state council announced ambitious plans to "vigorously boost consumption" by putting up pay and reducing financial burdens in its latest attempt to increase consumer confidence and lift its struggling economy.

"We see a gradual recovery in the Australian dollar from the second quarter onward, propelled first by dollar depreciation followed by the lagged impact of China stimulus in the second half of 2025," said Oliver Levingston, a strategist at Bank of America in Sydney.  

Trade policies by US President Donald Trump raised concerns about the economic slowdown in the US, which has dragged the US Dollar (USD) lower. Investors brace for the preliminary reading of the US S&P Global Manufacturing Purchasing Managers Index (PMI) for March. However, the surprise upside reading could lift the Greenback and cap the upside for the pair.