AUD/USD stalls below 0.6540 ahead of the Fed statement

AUD/USD rally from 0.6250 stalls below 0.6540.
Aussie appreciates for the sixth consecutive day as the dollar loses strength.
Rabobank experts warn that economic uncertainty might weigh on the AUD.

Guillermo Alcala FXStreet

The Australian dollar is appreciating against the USD, extending a six-day rally from 0.6250 lows last week to levels past 0.6500. The AUD/USD has been buoyed by US dollar weakness, to reach seven-week highs at 06540, where the pair has stalled awaiting to FED President Powell’s speech.

The risk-on mood hurts the USD ahead of the Fed decision

The US dollar has been trading lower against its main peers on Wednesday, weighed by risk appetite on the back of a report suggesting that a COVID-19 treatment might be near. Likewise, the plans to start lifting lockdown restrictions that are being drafted by the main economies, have increased optimism, which has weighed further on the US dollar, favouring riskier assets like the AUD.

The pair, however, seems to have lost momentum over the last session and has stalled right below 0.6540 with all eyes on the US Federal Reserve. The Bank is widely expected to keep its benchmark interest rate unchanged at the 0%-0.25% band, thus the main focus will be on President Powell’s speech, which might set the trend for US Dollar crosses.

Rabobank warns that the economic uncertainty might hurt the aussie

In spite of the current AUD strength, FX analysts at Rabobank warn that the AUD can still suffer: “The AUD retains a strong link with risk appetite. While this has buoyed it in recent weeks, we expect support to fall away as Q2 economic data makes itself heard.”

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

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