The US Dollar received a strong impulse from the Federal Reserve. The greenback jumped and pushed AUD/USD from weekly highs at 0.8100 to 0.7985. During the last hour, the rally of the greenback lost strength and the pair bounced, rising back above 0.8000.
Pressure eased
At the moment, AUD/USD trades at 0.8020, up less than 20 pips for the day. The post-Fed bearish momentum eased. If it rises above 0.8030 the pair could gain more strength to continue with the bounce.
On the flip side, under 0.8000, daily lows would be exposed. If the US dollar resumes the rally, the strong support to watch is seen around 0.7950. The break of that area could lead to a decline to 0.7900.
“The 4 hours chart indicates that the pair maintains a positive stance ahead of the Asian opening, as additionally, Wall Street bared pretty well with Fed's tightening. Technical indicators in the mentioned time frame have bounced from their mid-lines, whist the price held above its 20 SMA, despite some intraday attempts to break below it”, said Valeria Bednarik, Chief Analyst at FXStreet.
Rate hike expectations up
The Fed left interest rate unchanged and announced the beginning of the balance sheet normalization process in October, as expected. According to the CME Group FedWatch Tool rate hike odds of a rate hike in December climbed from 50% to 70%. Most of the FOMC staff expected another rate hike before year end. Yellen’s press conference presented no surprises.
FOMC is still aiming for a third hike before the end of the year - Rabobank
Yellen Speech: Not going to comment on my intentions beyond February
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