• AUD/USD regains ground ahead of FOMC, while the USD consolidates losses.
• Chinese data concerns weigh on the AUD.
• Hawkish RBA keeps the Aussie afloat on Tuesday.

The AUD/USD has regained ground in Tuesday's session and has attracted some follow-through buyers, climbing to a nearly two-week high of 0.6755. The Australian Dollar is feeling the effect of consolidating losses by the US Dollar, as well as concerns about economic data coming from China. Furthermore, a positive risk tone has undermined the USD, adding to the AUD/USD's gains.

Due to conflicting economic signals and the Reserve Bank of Australia's (RBA) strict stance on inflation, the market's expectations for interest rate cuts have been scaled back. Market watchers now anticipate only a modest 25-basis-point reduction in 2024, reflecting a more cautious outlook on the Australian economy.

On Tuesday, the US released Retail Sales data from August that didn’t impact the USD but did surpass expectations as the focus is set on Wednesday’s Fed decision.