• AUD/USD drops from 0.6800 with Aussie inflation in focus.
• The monthly Australian CPI is expected to have declined to 3.4% in July from 3.8% in June.
• Investors see the Fed starting to reduce interest rates in September.

The AUD/USD pair slides from the monthly high of 0.6800 in Monday’s European session. The Aussie asset drops as the Australian Dollar (AUD) weakens amid uncertainty ahead of the monthly Consumer Price Index (CPI) data for July, which will be published on Wednesday.

The inflation data is expected to show that the annual CPI decelerated to 3.4% from 3.8% in June, which will prompt expectations that the Reserve Bank of Australia (RBA) could consider interest rate cuts this year.

The recent release of the RBA minutes indicated that the RBA is unlikely to cut its Official Cash Rate (OCR) in the remaining year as it will remain vigilant to upside risks to inflation.

Meanwhile, upbeat market sentiment fails to uplift the Australian Dollar. The market mood seems favorable for risky assets as traders have fully priced in the Federal Reserve (Fed) interest rate cuts in September. S&P 500 futures have posted decent gains in the European session. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges high after posting a fresh year-to-date (YTD) low of 100.53.