AUD/USD Price Analysis: Bulls looking to seize control above 0.7140 confluence ahead of FOMC

• AUD/USD gained strong positive traction on Wednesday and climbed back closer to mid-0.7100s.
• Mixed technical indicators warrant some caution for bulls ahead of the key FOMC policy decision.
• Acceptance below the 0.7100 round figure would shift the bias back in favour of bearish traders.

The AUD/USD pair climbed to a fresh daily top, around the 0.7145 area heading into the North American session and has now recovered a major part of its weekly lows.

The momentum pushed the AUD/USD pair beyond a resistance marked by the top boundary of a near one-week-old descending channel. This comes on the back of the overnight bounce from the 50% Fibonacci level of the 0.6993-0.7188 recent move up and supports prospects for additional near-term gains. A breakout from a channel suggests a target equal to the height of the channel extrapolated higher, which in this case might indicate a possible rise to as high as 0.7180. 

Bulls are now looking to build on the momentum beyond a confluence barrier comprising of 100-hour SMA and the 23.6% Fibo. level. Sustained strength beyond will reaffirm the intraday positive bias and push the AUD/USD further towards last week's swing high, around the 0.7180 resistance zone.

Some follow-through buying would set the stage for an extension of the recent recovery move from sub-0.7000 levels, or the lowest level since November 2020 touched earlier this December. That said, mixed technical indicators on hourly/daily charts warrant some caution before placing fresh bullish bets.

Traders might also be reluctant to place aggressive bets, rather prefer to wait on the sidelines heading into the key central bank event risk – the outcome of a two-day FOMC meeting. The announcement will influence the USD price dynamics and provide a fresh directional impetus to the AUD/USD pair.

Meanwhile, on the downside, the 38.2% Fibo. level, around the 0.7115-10 region, closely followed by the 0.7100 mark and the 50% Fibo. level should act as immediate support levels. A convincing break below will negate the positive bias and shift the bias back in favour of bearish traders.

The AUD/USD pair would then accelerate the slide towards challenging the key 0.7000 psychological mark. The downward trajectory could further get extended towards the next relevant support, around the 0.6930 region, before the pair eventually drops to the 0.6900 round-figure mark.

AUD/USD 1-hour chart

Technical levels to watch