AUD/USD Current Price: 0.6458
- RBA minutes reveal no surprises, and the market anticipates no changes at the next meeting.
- Attention turns to the FOMC, particularly on Powell's remarks and the staff's macroeconomic projections.
- AUD/USD exhibits a short-term bullish bias but lacks significant strength.
The AUD/USD rose despite a deterioration in market sentiment, but the gains were limited, and the pair failed to firmly break above 0.6470. The bias is tilted to the upside; however, conviction is lacking.
The Reserve Bank of Australia (RBA) released the minutes of its September 5 meeting, where rates were kept steady at 4.10%. The minutes repeated that further tightening might be necessary if inflation proves more persistent than expected. The next meeting is scheduled for October 3, the first under Governor Michele Bullock, and no change is expected.
During the Asian session on Wednesday, the Westpac Leading Index will be released. However, the more significant event will be the decision of the People's Bank of China. The 1-year Loan Prime Rate is expected to remain at 3.45% after last month's cuts, but there could be surprises. A rate cut could boost risk appetite. If the Chinese economy continues to stall, more rate cuts before year-end are likely but not necessarily this week.
The Federal Reserve (Fed) will announce its decision on Wednesday. No change is expected, and the FOMC is anticipated to keep the possibility of further rate hikes open if needed. The statement, macroeconomic projections, and Chair Powell's comments will be closely watched. Powell's tone will be necessary, as the fight against inflation is not yet won.
The US Dollar has seen appreciation but remains contained before the event. The U.S. Dollar Index (DXY) posted its first daily loss in ten days on Monday. While supported by the Fed's outlook, it is the US fundamentals that continue to fuel the Dollar.
AUD/USD short-term technical outlook
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The AUD/USD is about to post its highest close in three weeks, holding above the 20-day Simple Moving Average (SMA). However, upside momentum is limited around the 0.6470 zone. A decisive break is needed to clear the way towards 0.6500. The next significant barrier is located near the late August highs around 0.6520. A break above this level could set the stage for an extension towards 0.6570.
On the 4-hour chart, there is a bullish bias, with the price nearing the 0.6470 resistance and a downtrend line at 0.6480. Technical indicators show no clear signals, possibly influenced by the slow moves of the last few days. Ahead of the Asian session, a move below 0.6420 would favor the Greenback. Below that level, the key support is at 0.6400, and consolidation below it could trigger a test of recent lows.
Support levels: 0.6420 0.6400 0.6370
Resistance levels: 0.6475 0.6500 0.6520
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