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AUD/USD drops below 0.6600

The AUD/USD pair has dropped below the round-level support of 0.6600 in the late European session. The Aussie asset faces a sell-off as the market mood has turned downbeat due to deepening Middle East tensions. S&P500 futures are facing decent losses in the early New York session, portraying a decline in the risk appetite of the market participants. The US Dollar Index (DXY) remains stuck in a tight range near 103.50 as investors await the United States JOLTS Job Openings data for December, which will be published at 15:00 GMT.

Investors anticipate that US employers posted 8.75 million fresh new jobs, which are slightly down from 8.79 million advertised in November. However, the major focus this week will be on the interest rate decision by the Fed, which will be announced on Wednesday. The Fed is expected to leave interest rates unchanged in the range of 5.25-5.50% for the fourth time in a row. Investors will keenly focus on the interest rate outlook. As per the CME Fedwatch tool, investors are more confident about the Fed to start reducing interest rates in May.

Meanwhile, the Australian Dollar has fallen on the back foot as a sharp contraction in the monthly Retail Sales data for December has softened the inflation outlook. Consumer spending at retail stores dropped at a higher pace of 2.7% against expectations of 0.9%. In November, Retail Sales rose by 1.6%. Going forward, investors will focus on the Australian Consumer Price Index (CPI) data for the last quarter of 2023, which will be published on Wednesday. Investors see price pressures grow moderately by 0.8% against an increase of 1.2% in the July-September.