• The US Federal Reserve hiked rates by 75 bps.
  • The AUD/USD spiked to fresh highs as a reaction, then tumbled towards the 1-hour 50-SMA.
  • The US Federal Reserve Chairman Jerome Powell’s press conference is to begin.

On Wednesday, the US Federal Reserve raised rates by 0.75%, not as initially expected by market participants, as Federal Reserve Chairman Jerome Powell discounted a hike of that size. Nevertheless, the article published on Monday about the possibility of the Fed raising rates by the abovementioned size proved true. At the time of writing, the AUD/USD seesaws around the 0.6915-70 range as a reaction to the Fed’s monetary policy meeting.

Summary of the FOMC monetary policy statement

The FOMC stated its commitment to return inflation to the 2 percent target. They added that “inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.”

Regarding the US economic outlook, the Fed noted that the economic activity picked up after the negative reading in Q1. They added that the Fed would continue reducing its holdings, so the Quantitative Tightening (QT) began.

Also, in the same meeting, the Federal Reserve Open Market Committee revealed the Summary of Economic Projections (SEP), which showed that the Fed reduced its expectations for growth from 2.8% to 1.7%, while the unemployment rate would uptick to 3.7% from 3.5% projected in March.

Regarding their outlook about inflation, Fed officials expect the Core PCE at 4.3%, higher than the 4.1%, while the Federal Funds Rate by the end of 2022 is expected at 3.4%, 150 bps more elevated than the 1.9% projected in March.

It’s worth noting that the Federal Reserve expects another 50 bps hike in 2023, and then in 2024 would be the first-rate cut. Nevertheless, contrary to what the Bank of England (BoE) said in their last meeting, slashing growth to negative territory, the Fed appears optimistic.

AUD/USD 1-Hour Chart

Key Technical Levels

AUD/USD

Overview
Today last price 0.6939
Today Daily Change 0.0069
Today Daily Change % 1.00
Today daily open 0.687
 
Trends
Daily SMA20 0.7111
Daily SMA50 0.7169
Daily SMA100 0.7223
Daily SMA200 0.7248
 
Levels
Previous Daily High 0.6971
Previous Daily Low 0.685
Previous Weekly High 0.7248
Previous Weekly Low 0.7036
Previous Monthly High 0.7267
Previous Monthly Low 0.6828
Daily Fibonacci 38.2% 0.6897
Daily Fibonacci 61.8% 0.6925
Daily Pivot Point S1 0.6823
Daily Pivot Point S2 0.6777
Daily Pivot Point S3 0.6703
Daily Pivot Point R1 0.6944
Daily Pivot Point R2 0.7018
Daily Pivot Point R3 0.7064

 

 

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