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  • Aussie can’t find the gumption to hold at new peaks following Fed rate hike.
  • Trade wars remain the main driver of market sentiment, and the AUD is trapped in a sideways pattern.

The AUD/USD rallied from the week’s lows on Wednesday to peak at 0.7315 on reaction to the US Federal Reserve’s rate hike to 2.25%, but the broader market faded the action quickly and the Aussie is back into 0.7250, a level that has kept the pair under wraps since late last week.

The rest of the week is devoid of any meaningful Aussie data on the economic calendar, and Wednesday’s Fed showing leaves the USD-denominated FX space to await Fed chair Jerome Powell’s speech coming up on Thursday at 20:30 GMT.

The Aussie sees little intrinsic bullish drivers as of late, but the Pacific currency sees ebbs and flows in market sentiment as a result of Australia’s close trade relationship with China, who remains embroiled in a trade spat with the US that threatens to spill over into an all-out trade war, and bullish potential remains capped as long as the two superpowers continue to hurl trade tariffs at each other.

AUD/USD levels to watch

As long as trade headlines manage to bed back down long enough for the Aussie to get a foothold, the technical outlay is continuing to lean towards the bullish camp, as noted by FXStreet’s own Valeria Bednarik: “from a technical point of view, the short-term picture for the pair is now offering a neutral-to-bullish technical stance, as it’s trading above all of its moving averages in the 4 hours chart, which anyway lack directional strength, as technical indicators hold above their midlines, the Momentum heading nowhere around its 100 level, and the RSI currently at 55. As long as the price holds above 0.7255, however, the risk is skewed to the upside, with another attempt to break the 0.7300 threshold probably resulting in an advance up to 0.7360.”

Support levels: 0.7220 0.7190 0.7155  

Resistance levels: 0.7300 0.7335 0.7360