• AUD/USD trades at 0.6610 soaking in 0.50% gains, with bears struggling to seize control.
• Australian Retail Sales expected to decline by 3.5% MoM.
• Hawkish bets on the RBA are keeping the Aussie afloat.

On Monday's session, the AUD/USD forged ahead with 0.50% gains to settle at 0.6610. Despite an uncertain broader market sentiment, the daily chart exhibits a neutral to bullish outlook as bears grapple for ground. In that sense, as markets await the Federal Reserve (Fed) decision on Wednesday, markets brace for key Australian data on Tuesday to palace their bets on the next Reserve Bank of Australia (RBA).

In that sense, markets are bracing for a 3.5% MoM fall in Retail Sales in the last month from December, hinting at contraction in consumer spending. The RBA’s response to domestic economic indicators remains to be seen, although markets do not currently anticipate a rate cut until the second half of 2024.

Meanwhile, in the US, uncertainty looms large over Federal Reserve's policy direction with the Dallas Fed Index sliding significantly. The Fed, though expected to maintain rates at the upcoming meeting, might undertake its easing cycle mid-year, according to market consensus, which could weaken the USD. Messaging by Jerome Powell will be key.