AUD/USD jumps to near 0.6560 as US Dollar underperforms across the board

• AUD/USD refreshes two-week high around 0.6560 as the US Dollar faces a sharp selling pressure.
• Traders raise Fed's interest rate cut expectations after the release of the US CPI report for July.
• Investors await Aussie employment data, which will be released on Thursday.

The AUD/USD pair posts a fresh two-week high around 0.6560 during the European trading session on Wednesday. The Aussie pair strengthens as the US Dollar (USD) underperforms its peers, following a significant increase in market expectations supporting interest rate cuts by the Federal Reserve (Fed) for the September policy meeting.

During the press time, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, slumps to near 97.60.

On Tuesday, traders raised Fed's interest rate cut bets after the release of the United States (US) Consumer Price Index (CPI) report for July, which didn't show any notable sign of the impact of tariff on prices. However, price pressures grew mostly in-line with expectations, and the core CPI - which excludes volatile items, grew at a faster pace of 3.1% on an annual basis.

According to the CME FedWatch tool, the probability of the fed to cut interest rates in the September meeting has increased to 94% from almost 86% recorded on Monday.

Meanwhile, the Australian Dollar (AUD) trades firmly ahead of the employment data for July, which will be published on Thursday. The employment report is expected to show that the economy created fresh 25K jobs, significantly higher than 2K in June. The Unemployment Rate is seen falling to 4.2% from the prior reading of 4.3%.