• AUD/USD attracts some follow-through buyers and climbs to a nearly two-week high. 
• 50 bps Fed rate cut bets, and a positive risk tone undermines the USD, lending support. 
• Traders look to US Retail Sales data for some impetus ahead of the Fed on Wednesday. 

The AUD/USD pair gains traction for the second straight day on Tuesday – also marking the fourth day of a positive move – and climbs to a one-and-half-week high during the early part of the European session. Spot prices currently trade above mid-0.6700s, up around 0.15% for the day, as investors look to the outcome of a two-day Federal Open Market Committee (FOMC) meeting on Wednesday for a fresh directional impetus. 

Heading into the key central bank event risk, the US Dollar (USD) consolidates its recent heavy losses to the lowest level since July 2023 amid bets for an oversized 50 basis points interest rate cut by the Federal Reserve (Fed). This, along with the Reserve Bank of Australia's (RBA) hawkish outlook and a generally positive tone around the equity markets, turns out to be a key factor benefiting the risk-sensitive Aussie and lending some support to the AUD/USD pair. 

With the latest leg up, spot prices have now rallied nearly 150 pips from the vicinity of the very important 200-day Simple Moving Average (SMA) support, around the 0.6620 region, or a nearly four-week low touched last Wednesday. Moreover, the fundamental backdrop seems tilted in favor of the USD bears and suggests that the path of least resistance for the AUD/USD pair is to the upside. That said, concerns about a slowdown in China could act as a headwind.