AUD/USD holds on to gains, stays above 0.76 ahead of FOMC

Greenback weakens after inflation report.
Copper extends gains for the second straight day.
AUD/USD up more than 100 pips since Monday.

Eren Sengezer FXStreet

The AUD/USD pair gained traction and rose nearly 50 pips in the last hour after the inflation data from the United States triggered a broad-based USD sell-off. As of writing, the pair was trading at 0.7610, adding 0.7% on the day.

The US Dollar Index, which had been able to float above the 94 handle for the majority of the day, fell sharply after the data from the United States revealed that the core-CPI on an annual basis eased to 1.7% in November from 1.8% in December. Ahead of the crucial FOMC meeting, the index renewed its daily low at 93.78 before staging a modest recovery. At the moment, the index is at 93.90, down 0.17% on the day.

FOMC Preview: 11 major banks expectation from December meeting

Meanwhile, the commodity-sensitive aussie continues to outperform its peers as the price of copper extends its gains for the second straight day. Yesterday, a Goldman Sachs report suggested that the global economic growth would boost the demand for commodities. As of writing, copper futures (HGH8) were up 0.8% on the day at 3.047.

Technical outlook

With the third straight daily rise, the RSI indicator on the daily graph broke above the 50 mark, suggesting that the bullish momentum is building up. The pair could face the immediate hurdle at 0.7645 (50-DMA) ahead of 0.7710 (200-DMA) and 0.7730 (Nov. 2 high). On the downside, supports align at 0.7575 (20-DMA), 0.7500 (psychological level/December 10 low) and 0.7420 (Jun. 5 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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