- AUD/USD lost its traction after soft inflation data.
- US Dollar Index clings to modest gains around 91.00.
- Investors wait for FOMC to announce its monetary policy decisions.
The AUD/USD pair closed in the negative territory on Tuesday and came under renewed bearish pressure during the Asian trading hours on Wednesday. After slumping to a daily low of 0.7725, the pair managed to erase a portion of its daily losses and was last seen trading at 0.7748, where it was still down 0.22% on a daily basis.
Soft inflation figures hurt AUD
Earlier in the day, the data from Australia showed that the Consumer Price Index (CPI) in the first quarter edged higher to 1.1% on a yearly basis from 0.9%. This reading came in lower than the market expectation of 1.4% Additionally, the Reserve Bank of Australia's Trimmed Mean CPI fell to 1.1% from 1.2% during the same period and weighed heavily on the AUD.
In the meantime, the US Dollar Index is clinging to modest daily gains around 91.00, making it difficult for AUD/USD to stage a convincing rebound.
Later in the day, the FOMC will announce its Interest Rate Decision and release the Monetary Policy Statement. Previewing the FOMC's April meeting, "the FOMC won’t change rates or alter its language much in the official statement, given that it won’t have a new forecast," said CIBC analysts. "We’ll listen to Powell carefully for any reassurance, subtle though it will be, that if inflation doesn’t stay as muted next year as the Fed’s last projection, it's willing to act earlier on rates."
Federal Reserve Preview: Forecast from 12 major banks.
Technical levels to watch for
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