• The Australian Dollar extends losses due to a sharp drop in energy and metals prices.
• The AUD could limit its downside due to a potential rate hike from the RBA.
• The US Dollar faces challenges due to increasing bets on a Fed rate cut in September.

The Australian Dollar (AUD) weakens for the seventh consecutive session on Tuesday, driven by a steep drop in energy and metals prices. Given Australia's heavy reliance on commodity exports, the AUD is particularly sensitive to fluctuations in these assets.

The AUD could receive support as robust employment data indicate tight labor market conditions and raise concerns about a potential interest rate hike from the Reserve Bank of Australia (RBA). Investors look forward to Australian manufacturing and services PMI figures this week to gauge the economy's health.

The AUD/USD pair could limit its downside as the US Dollar (USD) faces challenges on rising bets on a Federal Reserve (Fed) rate cut in September. Federal Reserve (Fed) Chair Jerome Powell noted that he is becoming more hopeful about the progress on inflation in recent months. Meanwhile, Fed Governor Christopher Waller stated that the time to lower the policy rate is drawing closer.