- The Australian dollar has experienced multiple declines against the US dollar in recent weeks, with another pullback observed early on Wednesday.
- Notably, the Federal Open Market Committee (FOMC) meeting and its subsequent announcement, scheduled for later in the day, have the potential to trigger significant market movements.
AUD/USD
The Australian dollar exhibited a modest retracement during the trading session, with the 0.65 level serving as a prominent short-term support threshold. This level is deemed as a pivotal floor for the currency pair. It is important to acknowledge that this area has witnessed substantial market activity in the past, underscoring its significance.
A breach below the 0.65 level would entail a deeper correction, potentially leading to a move towards 0.6350. Such a move would likely coincide with a pronounced upswing in the US dollar's value. Conversely, an easier path might involve an upward move, which could be catalyzed by Jerome Powell's announcements during the FOMC meeting. The monetary policy stance adopted by the FOMC in 2024 holds considerable influence over the market's direction.
The market's proximity to the lower end of the range suggests the possibility of gradual upward movements. It is anticipated that the currency pair will continue to trade within this range for a significant portion of the year. It is worth noting that a Federal Reserve decision to reduce interest rates may initially weaken the US dollar, but any aggressive measures by the central bank could indicate global economic challenges, thereby adversely affecting the Australian dollar.
At the end of the day, the Australian dollar has recorded several declines against the US dollar in recent weeks. The FOMC meeting and its subsequent announcements present potential catalysts for market movements. The 0.65 level is a crucial short-term support level, with a breach possibly leading to a deeper correction. While the currency pair may experience volatility and noise, it appears to be closer to the lower end of its range in the current market environment. Expectations include choppiness and fluctuations, but the market's proximity to the bottom end of the range suggests a potential upward trajectory.
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