“¢ Snaps three consecutive days of downtick amid subdued USD demand.
“¢ Positive copper prices underpin commodity-linked Aussie and support.
“¢ Today’s key focus will be on the latest FOMC monetary policy update.
The AUD/USD pair quickly retreated around 20-pips from weekly tops, albeit has managed to hold with modest daily gains just above mid-0.7200s.
The pair stalled its rejection slide from 50-day SMA hurdle near the 0.7300 handle and caught some bids on Wednesday, snapping three consecutive days of downtick amid a subdued US Dollar price-action.
With investors looking past Tuesday’s upbeat US consumer confidence index, a modest retracement in the US Treasury bond yields did little to revive the USD demand and was seen as one of the key factors behind the pair’s up-move.
Adding to this, a mildly positive tone around copper prices extended some additional support to commodity-linked currencies – like the Aussie and remained supportive of the pair’s goodish rebound during the Asian session.
The momentum, however, seemed lacking strong conviction/follow-through buying amid persistent worries over the recent escalation of US-China trade tensions, which has been weighing on the China-proxy Australian Dollar.
Investors also seemed reluctant to place any aggressive bets ahead of today’s key event risk – the highly anticipated FOMC decision, due to be announced later during the US trading session. The Fed is widely expected to raise interest rates by 25bps points and hence, the key focus will be on the accompanying statement.
This along with the post-meeting press conference will be looked upon for clues over the pace of rate increases beyond September and should eventually help determine the pair’s next leg of directional move.
Technical levels to watch
Any meaningful retracement is likely to find support near the 0.7235 region, below which the pair is likely to accelerate the slide towards the 0.7200 handle en-route 0.7175-70 support area.
On the flip side, the 0.7295-0.7300 region (50-DMA) might continue to act as an immediate resistance, which if cleared might trigger a short-covering rally towards 0.7360 supply zone en-route the 0.7390 area.
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