AUD/USD seesaws around 0.7300 as all eyes turn to FOMC

• AUD/USD keeps the 20-pip range between 0.7290 and 0.7310 after stepping back from the highest in two weeks.
• Traders turn cautious amid a lack of major data/events in Asia.
• The pre-Fed sentiment and mixed clues from the risk catalysts also restrict the quote’s performance.
• Australia’s Westpac Leading Index, HIA New Home Sales for August will be followed for intermediate trading direction.

AUD/USD stays modestly changed while taking rounds to 0.7300 amid the early Wednesday morning in Asia. The aussie pair surged to the highest since September 02 on Tuesday as upbeat trade sentiment joined welcome economics. However, the US dollar’s recovery moves and the pre-Fed caution seem to limit the AUD/USD prices off-late.

Bulls and bears jostle amid mild optimism…

Not only China’s upbeat prints of Industrial Production and Retail Sales but RBA policymakers’ cautious optimism, as conveyed via the minutes of the September month monetary policy meeting, also helped the pair to refresh the multi-day high yesterday.

Also helped the pair during early-Tuesday were headlines suggesting a receding trade tension between the US and China. Following Beijing’s extension of tariff relief to certain American imports, the Trump administration also rolled back the previously announced ban on some products from Xinjiang, like tomatoes and cotton.

The market optimism was then carried forward as news suggested that the scientists at the University of Pittsburgh School Of Medicine developed a reliable antibody component to neutralize the coronavirus (COVID-19) infection.

However, upbeat prints of the US NY Empire State Manufacturing Index joined trade-negative headlines saved the US dollar from marking the third negative day in a row. The World Trade Organization (WTO) recently ruled against the US sanctions on China and the same may ire the Trump administration, which in turn could trigger a fresh round of trade tensions. Also challenging the risk-on mood is the pessimism surrounding the Brexit and the market’s cautious mood ahead of the Federal Open Market Committee’s (FOMC) monetary policy meeting, up for the announcement at 18:00 GMT.

Other than the Fed, traders may also take intermediate clues from Australia’s Westpac Leading Index and HIA New Home Sales for August. The housing data is expected to recover from 64.4% to 79.6% while the sentiment gauge earlier eased to the three month low of 0.06% in July.

Read: September FOMC Preview: Projections, projections, projections

Technical analysis

The pair’s sustained trading beyond the 21-day SMA, at 0.7266 now, keeps the buyers directed to towards the monthly high near 0.7415. Also providing strong downside support is an ascending trend line from July 14, currently around 0.7225.