AUD/USD: Sluggish around mid-0.7700s amid pre-Fed caution, vaccine jitters

• AUD/USD consolidates bounce off 0.7710 between 0.7730 and 0.7760, stays downbeat for fourth consecutive day.
• European nations struggle to decide over AstraZeneca usage, US diplomats’ Asia visit isn’t all positive.
• US data came in weaker-than-expected, RBA was minutes showed grave economic concerns.
• RBA’s Kent, Westpac Leading Index can offer intermediate moves but nothing more important than the US Federal Reserve meeting.

AUD/USD stays pressured for the fourth consecutive day, despite a recent bounce off 0.7710, while taking easing to 0.7742 amid the early Wednesday morning in Asia. Although the pair refrains from major moves, a gradual selling seems to build since the quote took a U-turn from 0.7801 on Friday. The market’s cautious sentiment ahead of today’s Fed meeting could be cited as the lead catalysts whereas the coronavirus (COVID-19) vaccine crisis in the European Union (EU) and the Biden administration members’ mixed feeling in their first Asian trip become extra factors to blame.

All eyes on Fed…

With the recently released $1.9 trillion stimulus anticipated to have a dual impact on the sentient, positive on hopes of faster economic recovery while negative on reflation fears, global market players are more interested than ever in today’s Fed meeting. Although the policymakers’ quarterly economic forecasts and dot-plot will be the key to watch, Powell’s statement can’t be underestimated while eyeing a move.

Read: Federal Reserve Preview: The Good, the Bad and the Ugly edition, three critical things to watch

Elsewhere, the market mood remains sour many European nations keep dumping their headline vaccine, AstraZeneca, amid fears of blood clotting. The European Medicine Authority (EMA) will give the official reply next Thursday to solve the doubts. However, this surely delays the bloc’s economic recovery as it already lags in vaccine drive.

Also challenging the sentiment could be fresh fears from North Korea and China as US Secretary of State visits Asia-Pacific allies. As per the latest updates from CNN, the US has assessed North Korea could be preparing to carry out the first weapons test since Biden took office. Some more headlines that recently weighed the mood are the S&P’s rating update on the US as well as fears of nuclear build in Iran.

Amid these plays, downbeat readings of the US Retail Sales couldn’t recall the AUD/USD buyers while the Wall Street benchmarks eased from record top. Further, the US 10-year Treasury yields also rose 1.4 basis points (bps) to 1.62% by the press time.

Looking forward, RBA Assistant Governor (Financial Markets) Christopher Kent is up for a speech at 23:30 GMT with the scheduled release of the Aussie Westpac Leading Index for February, prior 0.26%. Even if the scheduled release can probe the bulls with upbeat releases, if any, market mood can keep weighing on the AUD/USD ahead of the Fed.

Technical analysis

The recent lower high formation below 21-day SMA, at 0.7783 now, directs AUD/USD towards an ascending support line from December 21, currently around 0.7655.