AUD/USD bulls eyeing a move beyond 0.7700 handle, FOMC awaited

   •  A modest USD retracement helps bounce off 3-month lows.
   •  Positive commodity prices provide an additional boost. 
   •  Focus remains on the latest FOMC policy update. 

The AUD/USD pair staged a solid rebound from 3-month lows and is now looking to build on its momentum back above the 0.7700 handle.

The pair caught some decent bids near the 0.7680-75 region and has now recovered a major part of previous session fall to the lowest level since March 21. A modest US Dollar, possibly on the back of some repositioning trade ahead of the much awaited FOMC policy update, seemed to be one of the key factors driving the pair higher.

This coupled with higher commodity prices further underpinned the commodity-linked Australian Dollar and remained supportive of the pair's strong bid tone through the early European session.

It, however, remains to be seen if bulls are able to maintain the dominant position or the up-move once again fizzles out near the 0.7715-25 supply zone amid expectations of a 25 bps Fed rate hike move. 

Markets now look forward to the US central bank's updated economic projection, which along with the outlook for future interest rates, as represented by the “dot plot”, would now help determine the next leg of a directional move for higher-yielding currencies - like the Aussie. 

Technical levels to watch

Momentum beyond the 0.7715-25 region is likely to get extended towards 0.7755 horizontal level before the pair eventually darts back towards reclaiming the 0.7800 handle. On the flip side, 0.7680-75 area now seems to have emerged as immediate support, which if broken might turn the pair vulnerable to extend its downfall towards 0.7640-35 intermediate support en-route the 0.7600 handle.