AUD/USD holds ground above 0.6500, eyes on US-China trade talks

• AUD/USD faced challenges as the US Dollar appreciates on the US-EU trade deal.

• US-China trade talks are set to resume on Tuesday.

• The RBA is expected to monitor the June labor force data and second-quarter inflation figures closely.

AUD/USD edges higher after registering losses in the previous three sessions, trading around 0.6520 during the Asian hours on Tuesday. The pair faced challenges as the US Dollar (USD) rose on the trade deal between the United States (US) and the European Union (EU).

The US and EU reached a framework trade agreement on Sunday that sets 15% tariffs on most European goods, taking effect on August 1. This deal has ended a months-long stand-off, per Bloomberg.

Traders keep their eyes on further developments in the US-China trade talks. The discussions are set to resume on Tuesday after top economic officials from both nations held over five hours of negotiations in Stockholm on Monday. The purpose of this meeting is to resolve ongoing disputes and extend their trade truce by another three months.

US Treasury Chief Scott Bessent met with China’s Vice Premier He Lifeng at Sweden’s Rosenbad government offices. The meeting comes ahead of an August 12 deadline to finalize a long-term tariff agreement with the Trump administration, building on preliminary deals reached in May and June that had helped ease tensions.

The US Federal Reserve (Fed) is widely expected to keep the benchmark interest rate steady between 4.25% and 4.50% at its July meeting. The FOMC press conference will be observed for any signs that rate cuts may start in September.

The Reserve Bank of Australia (RBA) is expected to closely watch the June labor force data and second-quarter inflation figures before deciding on a potential rate cut. Both the monthly and quarterly CPI reports are scheduled for release later this week.