The Australian dollar entered the Fed decision as maybe the most vulnerable currency. The central bank in the land down under wants AUD/USD to see 0.75, China is slowing down and so are prices of Australia’s export commodities.
It seemed alright at first: The Fed statement was quite balanced on all accounts, and this allowed Aussie/USD to rise above 0.82. However, Yellen’s optimism sent eh pair lower, to new levels last seen in 2010 and ever closer to losing those lows.
Yellen basically said that rates will rise in 2015, erasing doubts. She did say rates will not rise in the next “couple of meetings” and some markets see it as a hint for a hike in April. Her view on employment was positive and her view on oil prices was a “net positive”. She sees lower inflation as transitory.
At the time of writing, AUD/USD trades around 0.8130.
The critical level is 0.8066, which was the key level back 4 years ago, and it is closely followed by the very round number of 0.80.
On the top side, we have the previous low of 0.8140, followed by the round number of 0.82. Stronger resistance awaits only at 0.83.
Bank analysis: AUD/USD Next Targets Down Under – Morgan Stanley
Here is the chart:
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