AUD/USD Outlook: Dollar Climbs in the Wake of Hawkish Fed

• The Federal Reserve boosted interest rates by a widely anticipated 50bps.
• Fed Chair Jerome Powell stated that rates were anticipated to climb over 5%.
• China’s economy continued to lose momentum in November as factory output slowed.

Today’s AUD/USD outlook is bearish as the dollar rises in the wake of the FOMC meeting. The Federal Reserve boosted interest rates by a widely anticipated half percentage point overnight, and its officials anticipated making additional raises and keeping rates high for longer than initially anticipated.

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Fed Chair Jerome Powell stated that rates were anticipated to climb over 5%, demonstrating the Federal Open Market Committee’s resolve to contain inflation despite the possibility of a recession.

The US dollar index increased to 103.89, up 0.22% against a basket of its major rivals. However, it was still hovering close to a six-month low it had reached in the previous session, which had indicated market skepticism over whether the Fed would truly raise interest rates that high.

In Asia, data released on Thursday revealed that China’s economy continued to lose momentum in November as factory output slowed and retail sales continued to decline, both of which missed forecasts and recorded their worst readings in six months. The rising COVID-19 cases and the widespread virus curbs, which were only loosened last week, hampered the economy.

The Aussie, frequently used as a liquid substitute for the yuan, decreased by 0.55% to $0.6826.

AUD/USD key events today

Investors will be keen on retail sales data from the United States That will shine a light on the state of the economy and consumer spending. There will also be an initial jobless claims report from the US that will give insight into the labor market.

AUD/USD technical outlook: Prices to retest the 0.6800 support level

Looking at the chart above, we see the price pulling back after facing the 0.6875 resistance and failing to break above. Although bears are in charge of the current move, the trend is still bullish. This is because the price is still above 30-SMA, and the RSI is trading slightly above 50.

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Bears are approaching a support zone comprising the 30-SMA and the 0.6800 key level. They would have to gather a lot of momentum to break below this level. If they fail, bulls will return to resume the bullish trend and possibly break above 0.6875.

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