- US dollar and yields rise after FOMC minutes.
- AUD/USD back under pressure, lows near 0.7110 exposed.
The AUD/USD pair approached daily lows following the release of the FOMC minutes from the latest meeting when it rose the key rate by 25 basis points to the 2.00-2.25% range.
After the beginning of the US session, AUD/USD bottomed a t0.7109 and then bounced to the upside. The rebound from the lows was capped around 0.7130. After the Fed’s minutes, the pair turned again to the downside and it was trading at 0.7115, with an increasing negative momentum, approaching daily lows.
The greenback strengthened after the minutes. A number of officials saw the need to hike interest rates above the long-run level. The US dollar was cited as a risk to growth and to the inflation outlook, in the case of excessive appreciation. The minutes left the doors open to more gradual rate hikes.
Technical outlook
The pair reached weekly highs earlier today at 0.7158 and then reversed, falling almost 50 pips from the top to 0.7109. The intraday tone is negative and a test of daily lows could be seen before the Asian session. Under 0.7109, 0.7100 would be exposed and a break lower could add more strength to the greenback.
In order to recover momentum, the Aussie needs to rise back on top of 0.7130. On a wider perspective, a consolidation on top of 0.7150 is need to clear the way to more gains.
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