AUD/USD struggles near 1-1/2 week lows, FOMC in focus
| • Dovish comments by RBA’s Lowe exert some fresh downward pressure.
• A pickup in the USD demand/weaker commodities adds to the selling bias.
• Market focus remains firmly on the highly anticipated FOMC decision.
The AUD/USD pair struggled to gain any meaningful traction and remained within striking distance of 1-1/2 week lows touched earlier today.
The pair extended this week's rejection slide from 100-day SMA and weakened farther below the 0.7600 handle on the back of dovish comments by RBA Governor Philip Lowe, warning that the current pace of wages growth is not compatible with the central bank's goal of keeping inflation at 2.5%.
Lowe further reaffirmed that the likely next move on interest rates will be an increase, but such a thing would probably not come in the near-term and hence, did little to inspire the bulls.
Adding to this, a modest pickup in the US Dollar demand, supported by an uptick in the US Treasury bond yields exerted some additional downward pressure on the major.
This coupled with a weaker tone around commodity space, especially copper, which tends to undermine demand for the commodity-linked Australian Dollar, further collaborated towards keeping a lid on the pair's recovery attempt.
Meanwhile, investors also seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of today's key event risk - the highly anticipated FOMC decision, which would play a key role in determining the pair's next leg of directional move.
Technical levels to watch
Immediate support is now pegged near the 0.7540-35 region, below which the pair is likely to accelerate the fall towards challenging the key 0.7500 psychological mark. On the upside, momentum above 0.7575-80 immediate hurdle might lift the pair back above the 0.7600 handle towards retesting the 0.7625-30 supply zone.
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