AUD/USD: Teases monthly low after Fed showdown, 0.7640 becomes the key

• AUD/USD remains heavy near three-week bottom, fails to keep bounce off 0.7643.
• Fed matched wide market expectations of a dovish halt, ECB official renewed further rate cut expectations.
• Wall Street, US 10-year Treasury yields drop while US dollar poked eight-day top.
• Aussie Import-Export Price Index can offer intermediate moves, risk catalysts and US GDP will be important.

AUD/USD bears catch a breather around 0.7650 after posting the biggest daily loss in three months the previous day. In doing so, the aussie pair flirts with the 0.7640 key support during the initial Asian session on Thursday. While the pre-Fed cautious sentiment and the ECB Governing Council Member Klass Knot’s dovish comments pleased AUD/USD bears during the mid-Wednesday, Federal Reserve played its role to keep them on the table.

Read: Forex Today: Dismal US data and central banks smashed the USD

Central bankers entertained sellers…

ECB’s Knot, also the Dutch Governor, hinted at further rate cuts, below zero, during his latest appearance on Wednesday. On the other hand, the US Fed left interest rates unchanged, as expected, but showed concerns regarding US economic activity and employment conditions. Further, Fed Chairman Jerome Powell struck cautious optimism with his comments suggesting economic uncertainty and brighter prospects for recovery.

Talking about data, Aussie inflation did broadly well in the fourth quarter (Q4) and so do the US Durable Goods Orders in December but AUD/USD bulls aren’t convinced with mixed details.

It should be noted that the coronavirus (COVID-19) vaccine news is upbeat off-late, except for the EU-UK tussle over the dearth of medicine in the bloc and the European Union’s (EU) demand to fill the vaccine shortfall from AstraZeneca by Britain, conveyed by the UK’s Financial Times.

Against this backdrop, Wall Street benchmarks closed with over 2.0% losses while the US 10-year Treasury yields also stay depressed near 1.03%. The risk-off mood also helped the US dollar index (DXY) that probes the highest level since January 18, which is also the monthly top.

Moving on, global markets may consolidate the Fed-led moves ahead of the preliminary readings of the US Q4 GDP, expected 3.9% versus 33.4% prior. Before then, Australia’s Import Price Index and Export Price Index for the Q4, forecasts -2.4% and -1.3% QoQ respectively versus -3.5% and -5.1% priors in that order, can entertain the AUD/USD traders. It’s worth mentioning that the risk catalysts like US-China tussle, virus updates and vaccine news, not to forget the US fiscal stimulus developments can also offer notable moves to the AUD/USD and shouldn’t be ignored.

Technical analysis

Despite marking the heaviest drop in three months, AUD/USD is yet to break a horizontal area comprising December 17 top and January 04 low. As a result, a corrective pullback can’t be ruled out. However, bulls are less likely to get convinced unless breaking a descending trend line from January 06, currently around 0.7770.