• AUD/USD edges lower to near 0.6790 in Wednesday’s early Asian session. 
• Escalating geopolitical tensions might weigh on the pair, while the Fed rate cut bets might cap its downside. 
• Investors will monitor the Australian monthly CPI report, which is due on Wednesday.

The AUD/USD pair trades with mild losses around 0.6790 on Wednesday during the early Asian session. The risk-off mood amid escalating geopolitical tensions in the Middle East weighs on riskier assets like the Australian Dollar (AUD). Investors will take more cues from the Australian monthly Consumer Price Index (CPI) on Wednesday for fresh impetus. 

The rising Middle East geopolitical risks might boost the safe-haven flows, benefiting the Greenback for the time being. Thousands of troops from special units mobilized for a large-scale operation in the northern West Bank, which is anticipated to take several weeks, per the local news agency Aljazeera. 

However, the US Federal Reserve's (Fed) rate cut expectations are likely to cap the upside of the US Dollar (USD) and provide some support to AUD/USD. The US Fed is anticipated to cut rates in September, with a quarter-point move expected after Fed Chair Jerome Powell said on Friday that it was time to cut rates.