AUD/USD recovers above 0.7700 as focus shifts to FOMC meeting
|- AUD/USD is staging a rebound following Tuesday's decline.
- US Dollar Index stays relatively calm around 90.50.
- FOMC will announce policy decisions and release updates Summary of Economic Projections.
The AUD/USD pair closed in the negative territory on Tuesday and fluctuated in a tight range during the Asian trading hours on Wednesday before gaining traction. As of writing, the pair was up 0.3% on the day at 0.7707.
The latest rebound witnessed in AUD/USD seems to be a technical correction amid a lack of significant fundamental drivers. Earlier in the day, the data from Australia showed that the Westpac Leading Index declined to -0.06 in May from 0.19% in April but this print failed to trigger a noticeable market reaction.
DXY stays in consolidation ahead of FOMC
Meanwhile, the US Dollar Index, which touched its highest level in a month at 90.67 on Tuesday, continues to move sideways around 90.50.
Later in the session, the FOMC will announce its policy decision and publish the Monetary Policy Statement alongside the updated Summary of Economic Projections. The dot plot showed in March that four policymakers are expecting a rate hike in 2022 and a hawkish shift in participants' outlook could help the greenback gather strength and vice versa.
Previewing this event, "the Federal Reserve is set to release updated forecasts, which are set to trigger the initial market reaction, potentially one that is dollar positive," said FXStreet analyst Yohay Elam. "Fed Chair Powell could dampen such gains with caution, especially if rejects any early withdrawal of stimulus."
Federal Reserve Preview: First up, then down? Playbook for trading the Fed.
Technical levels to watch for
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