AUD/USD retreats ahead of Australia's CPI release, US FOMC Minutes

• AUD/USD plunges from prior psychological resistance at 0.6500.
• Australia awaits April's CPI data, while the US looks for clues on the Fed's next move in the FOMC Minutes.
• Monetary policy divergence and rate expectations remain critical for the pair's next move.

The Australian Dollar (AUD) is facing renewed pressure against the US Dollar (USD) on Tuesday as the Greenback rebounds across the board following mixed US economic data and a resurgence in market liquidity.

After posting a 1.42% gain last week and briefly touching a six-month high of 0.6537 on Monday, AUD/USD has pulled back below the 0.6500 handle at the time of writing. The move reflects a combination of technical exhaustion and shifting macroeconomic sentiment.

AUD/USD looks ahead to Australia's CPI data release and FOMC Minutes

Despite broader concerns surrounding President Trump's fiscal agenda and tariff threats, the Federal Reserve's (Fed) continued hawkish tone has helped limit downside pressure on the USD. In contrast, the Reserve Bank of Australia (RBA) remains dovish, prioritizing support for domestic growth amid rising external uncertainty.

Markets are now turning attention to upcoming inflation data in Australia. The Monthly Consumer Price Index (CPI) for April is due Wednesday, with the annual inflation rate expected to ease to 2.3% from 2.4% previously. 

A softer print could reinforce expectations for further RBA rate cuts in the months ahead.

In the United States, focus shifts to the release of the Federal Open Market Committee  (FOMC) Meeting Minutes from the May rate decision, which may offer greater clarity on the Fed's policy outlook amid persistent inflation and fiscal headwinds.

With policy divergence becoming more pronounced and the AUD lacking fresh domestic catalysts, the pair may struggle to regain upward momentum. A sustained break below 0.6450 could expose AUD/USD to further downside toward key psychological support at 0.6400.