AUD/USD tumbles to near 0.6500 as US Dollar gains on US-EU tariff deal approval

• AUD/USD slumps to near 0.6500 as the US Dollar strengthens on US-EU trade agreement.
• The US reduces tariffs on imports from the EU to 15%.
• Investors await a slew of US data, Australian Q2 CPI and the Fed's monetary policy.

The AUD/USD pair is down almost 0.6% to near the psychological level of 0.6500 during the European trading session on Monday. The Aussie pair faces a sharp selling pressure as the demand of the US Dollar (US) has increased after the announcement of trade agreement between the United States (US) and the European Union (EU) over the weekend.

The details of the US-EU deal shows that Washington has reduced the tariff rate on imports from Brussels to 30%, the half of what President Donald Trump had threatened in the mid of the month.

Market sentiment turns extremely favorable for riskier assets as the US-EU deal has diminished fears of a disruption in the global trade flow. S&P 500 futures trade higher during the European trading session. However, a firm US Dollar has weakened demand for risk-sensitive assets.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, surges to near 98.30, the highest level seen in a week.

Going forward, investors will focus on a slew of US economic data, notable Personal Consumption Expenditure Price Index (PCE) for June and the preliminary Q2 Gross Domestic Product (GDP) data. While the major highlight will be the Federal Reserve's (Fed) monetary policy announcement on Wednesday.

On the Aussie front, investors await the Q2 Consumer Price Index (CPI) data for July, which will be published on Wednesday. The CPI data is expected to show that price pressures grew at a moderate pace. Subdued growth in price pressures would boost market expectations that the Reserve Bank of Australia (RBA) could reduce interest rates in the monetary policy next month.