AUD/USD takes on the 0.7190s as a key psychological level post the Fed while the US dollar extends weekly losses into 93.24 (DXY). Coronavirus keeps the Fed in a bind and weighs on the greenback. The commodity complex thrives in two-year lows for the US dollar. The Federal Reserve stated the obvious but has confirmed the market’s recent view, that the economy will depend significantly on the course of coronavirus outbreak. As a result of the Fed’s dovish announcements today, (leaving rates unchanged, repeats that it is committed to the full range of tools) the US dollar has sunk to a fresh weekly low to 93.24. The weakens in the greenback stems from an eroding perception that the economy can contour to outperform the rest of the developed world which has eroded the currency’s allure. As the dollar heads towards the abyss, emerging markets and debt liabilities have just become a great deal cheaper which tends to favour the commodity complex and the Australian dollar that trades as a proxy. AUD/USD was already bid ahead of the meeting, extending well beyond its pre-COVID levels and is now testing the 0.7200 area having scored a high of 0.7194. Fed key take-aways Fomc rate decision (lower bound) actual: 0.00% vs 0.00% previous; est. 0.00%. Voted 10-0 for fed funds rate action. Fed committed to using full range of tools to support US economy. Path of the economy will depend significantly on course of coronavirus outbreak. The economy picked up in recent months, but still below pre-pandemic levels. Following sharp declines, economic activity and employment have picked up somewhat recent months but remain well below their levels at the beginning of the year. Fed Chair, Jerome Powell is now speaking. With COVID cases ravaging the US and the job market stalling, there is a risk that Powell sounds more bearish than dovish. He has so far said that the path is seriously uncertain for the economy. Stocks could come under pressure on mounting bearishness over the US economy and the Aussie had been correlated to the performance on Wall Street throughout the crisis. However, FX correlations to equities have recently weakened across much of the G10 and this includes the high-beta currencies. Therefore, so long as the dollar stays weak, it could be blue skies for the Aussie, regardless how stocks perform. Blue skies for AUD? From a teaching point, AUD/USD remains bid near term. AUD has stronger insulation from swings in sentiment, backed by Australia’s historically large trade and C/A surpluses. Also, China’s industry-driven economic rebound has supported AUD’s outperformance. Industrial commodities are likely to outperform which makes the emerging market backdrop a compelling correlation to continue to monitor. However, analysts at Commerzbank warned of the 13 count on the daily chart. We have a short term uptrend at .7050 and would tighten profit stops to just below here. Key support is offered by .6778/74, the February high and mid-June low. We would allow for gains to the 55-month moving average at .7284, which we would expect to hold the initial test. Also, the monetary policy outlook is coming back into play next week. The Reserve Bank of Australia may be concerned about Victoria’s return to lockdown. While negative interest rates and FX intervention are not on the cards, for now, markets will be tuned into the latest take on the fluent risks that are the spread of the virus and its negative impact on the economy. AUD/USD levels FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next S&P 500 Price Analysis: The major bourses push higher after the Fed meeting FX Street 3 years AUD/USD takes on the 0.7190s as a key psychological level post the Fed while the US dollar extends weekly losses into 93.24 (DXY). Coronavirus keeps the Fed in a bind and weighs on the greenback. The commodity complex thrives in two-year lows for the US dollar. The Federal Reserve stated the obvious but has confirmed the market's recent view, that the economy will depend significantly on the course of coronavirus outbreak. As a result of the Fed's dovish announcements today, (leaving rates unchanged, repeats that it is committed to the full range of tools) the US dollar has sunk to a fresh weekly low to 93.24. 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