- AUD/USD finds decent support near 0.78.
- US Dollar Index stays in positive territory ahead of FOMC.
After easing to a daily low near the 0.78 mark, the AUD/USD pair regained its traction and retraced its daily losses to turn positive on the day. As of writing, the pair was trading at 0.7840, up 0.11% on the day.
Earlier today, the US Dollar Index started to retrace yesterday's losses as investors took some profit off the table before the FOMC releases the minutes of its December meeting, at which it decided to hike policy rate by 25 basis points. Ahead of the FOMC, investors will be looking for a short-term catalyst in the ISM Manufacturing PMI data. Following yesterday's upbeat Markit Manufacturing PMI reading, a positive figure could help the greenback gather strength against its rivals. At the moment, the DXY is at 91.78, up 0.25% on the day.
Despite the DXY's recovery, however, the pair is sticking to small gains as buyers continue to defend the 0.78 handle. Nonetheless, with the momentum indicators on the daily chart showing overbought conditions and investors refraining from taking large positions ahead of the FOMC, the pair could struggle to rise further in the short-term.
Technical levels to consider
The pair could encounter the first technical resistance at 0.7885 (Oct. 19 high) ahead of 0.7965 (Sep. 24 high) and 0.8000 (psychological level). On the flip side, supports align at 0.7785 (Dec. 29 low), 0.7735 (200-DMA) and 0.7650 (Dec. 21 low).
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