The Australian dollar continues to chop back and forth against the US dollar on Wednesday, as traders are trying to gauge what the risk profile will be ahead of the FOMC.
AUD/USD
During the trading session on Wednesday, we are going to see a lot of noisy behavior. The Australian dollar has pulled back just a bit during the trading session here on Wednesday, but we are waiting for the latest Federal Reserve interest rate decision and perhaps more importantly press conference and statement.
So, with that being the case, I think you have to understand that the market is going to be choppy and where we go from here rests on the shoulders of traders trying to determine what it is Jerome Powell actually meant. That is typically a very tall order because the man is as clear as mud most days when he does give these press conferences.
Technical Analysis and Consolidation
That being said, from a technical analysis standpoint we are still in the same consolidation area between 0.6950 and 0.7150 and I think unless something changes drastically, we may stay there. The 1 outlier would be if Powell is decidedly hawkish or dovish, then the Aussie will move accordingly.
If the US central bank seems to be a little bit more hawkish than thought, that could send this market challenging to the 0.69 level. If we break down below there, we could correct it all the way to 0.67. On the other hand, if for some reason he sounds dovish, the Aussie dollar continues its somewhat gentle uptrend and breaks out to the upside as the Reserve Bank of Australia has raised rates again. All things being equal, this is a choppy sideways market probably doesn't change too much between now and the Fed conference, it would take an external shock maybe a war headline or something to really get it moving.