AUD/USD Price Forecast: Holds Firm Above 0.7100, Bulls Await Trump-Xi Meeting

AUD/USD attracted dip-buying in the Asian session on Monday after a gap-down open, with the pair trading near 0.71246, firmly holding above the 0.7100 round figure. Spot prices were hovering around the 0.7235 region earlier at the time of writing, with current movement reflecting cautious sentiment ahead of a key diplomatic event.

**Summit Expectations Dominate as Key Variable**

Investors are focused on the upcoming China-US leaders' meeting. Reports indicate that high-level talks have already commenced between the two sides ahead of the summit, with markets anticipating an easing of trade relations. This expectation provides some support for the Australian dollar—as a currency highly sensitive to risk sentiment, any signal of improved China-US ties could drive the Aussie higher. However, bulls remain restrained until concrete outcomes materialize.

**Risk Appetite and Policy Pressures Coexist**

Improved global risk appetite is the macro backdrop benefiting the Australian dollar recently, corroborated by rising bullish futures positioning in the market. However, upside room is constrained by Fed policy expectations, with increasing bets on Fed rate hikes posing resistance to further AUD gains. Minneapolis Fed President Kashkari previously stated that inflation remains too high across all segments of the US economy, a stance that reinforces the outlook for elevated rates and creates potential pressure on risk currencies.

**Near-Term Technical Levels Clearly Defined**

The 0.7100 level has now turned into immediate support, with prices having touched around 0.7200 earlier. Should the summit yield positive outcomes, bulls could target the region above 0.7200; conversely, any signs of tension could trigger a retest of this support level. As of midday in the Asian session, the pair is trading within a narrow range, with directional breakout still awaiting summit-related news.