AUD/USD sticks to gains above mid-0.7100s, lacks bullish conviction ahead of FOMC

A combination of factors assisted AUD/USD to gain some positive traction on Wednesday.
Stability in the equity markets, RBA rate hike bets benefitted the perceived riskier aussie.
Investors, however, preferred to wait on the sidelines ahead of the crucial FOMC decision.

Haresh Menghani FXStreet

The AUD/USD pair traded with a positive bias heading into the European session and was last seen hovering near the daily high, around the 0.7160 region.

Following the previous day's good two-way price move, the AUD/USD pair regained positive traction on Wednesday and was supported by a combination of factors. Signs of stability in the global equity markets, along with expectations for an earlier interest rate hike by the Reserve Bank of Australia acted as a tailwind for the perceived riskier aussie.

Tuesday's stronger Australian CPI report fueled speculations that the RBA will scrap its bond-buying program at its upcoming meeting and open the door to rate rises this year. In fact, the headline CPI rose 1.3% in Q4, pushing the yearly rate to 3.5%. Adding to this, the core CPI surpassed the midpoint of the RBA's 2-3% target for the first time since June 2014.

On the other hand, the US dollar consolidated its recent gains to a two-week high and remained well supported by expectations that the Fed will tighten its policy at a faster pace than anticipated. The markets seem convinced that the US central bank would begin raising interest rates in March and have been pricing in a total of four hikes in 2022.

Hence, the focus will remain glued to the outcome of a two-day FOMC monetary policy meeting, scheduled to be announced later during the US session. Heading into the key event risk, investors might refrain from placing aggressive directional bets and prefer to wait on the sidelines. This, in turn, should keep a lid on any further gains for the AUD/USD pair.

Even from a technical perspective, the recent breakdown below an upward sloping trend-channel extending from the 2021 low warrants some caution for bullish traders. Hence, it will be prudent to wait for a strong follow-through buying before confirming that the AUD/USD pair has formed a strong base near the 0.7090 area and positioning for any meaningful upside.

Technical levels to watch

AUD/USD

Overview
Today last price	0.716
Today Daily Change	0.0004
Today Daily Change %	0.06
Today daily open	0.7156

Trends
Daily SMA20	0.7212
Daily SMA50	0.7185
Daily SMA100	0.7273
Daily SMA200	0.7407

Levels
Previous Daily High	0.7177
Previous Daily Low	0.712
Previous Weekly High	0.7277
Previous Weekly Low	0.7169
Previous Monthly High	0.7278
Previous Monthly Low	0.6993
Daily Fibonacci 38.2%	0.7156
Daily Fibonacci 61.8%	0.7142
Daily Pivot Point S1	0.7125
Daily Pivot Point S2	0.7095
Daily Pivot Point S3	0.7069
Daily Pivot Point R1	0.7182
Daily Pivot Point R2	0.7208
Daily Pivot Point R3	0.7239

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis

GBP/USD attacks 1.3300, refreshing three-month lows

GBP/USD is deep in the red near 1.3300, accelerating its downside to renew three-month lows in European trading on Tuesday. The ongoing escalation in the Iran war, combined with rising Oil prices, weighs negatively on the higher-yielding Pound Sterling as the US Dollar capitalizes on increased haven demand.

Gold bounces off lows, back above $5,100

Gold remains on the defensive, eroding part of the recent multi-day advance and managing to trade back above the $5,100 mark per troy ounce on Tuesday. The precious metal initially dropped just below the critical $5,000 threshold on the back of the persistent strength of the Greenback, higher US Treasury yields across the curve and investors' repricing of Fed rate cuts.