AUD/USD started the new week on a downbeat note and settled firmly above the 0.6400 round number during the Asian session. Additionally, spot prices have remained stable in a familiar range over the past month or so, with traders yet to make their next directional move before looking for a new catalyst.

Meanwhile, China’s macro data release on Monday could provide some momentum to AUD/USD and allow traders to take advantage of short-term opportunities. However, the immediate market reaction is more likely to be limited as the focus remains on Tuesday's key Reserve Bank of Australia (RBA) policy decision.

The Reserve Bank of Australia is expected to cut its key interest rate by 25 basis points and reduce borrowing costs two more times this year on slowing inflation and growth concerns caused by trade tensions. However, the easing of the U.S.-China trade war has tempered market bets on more aggressive policy easing from the RBA.

Nonetheless, the policy outlook will impact the Australian dollar (AUD) and determine the next directional move in AUD/USD. A shift in global risk sentiment - as seen in broad equity market weakness - is seen limiting gains for the Australian dollar as key central bank event risks approach.

An unexpected downgrade of the U.S. government's credit rating dampened investors' appetite for risky assets. Apart from this, bets on more rate cuts from the Federal Reserve (Fed) have kept the US dollar (USD) subdued, which in turn could continue to provide a tailwind for the AUD/USD pair, keeping bearish traders cautious.