The US Fed: 20 or 50 Basis Points?
Later on Wednesday, attention will turn to the FOMC interest rate decision, economic projections, and press conference. While the consensus is for a 25-basis point Fed rate cut, the CME FedWatch Tool shows a 64% chance of a 50-basis point rate cut.
A 25-basis point Fed rate cut and optimism for a soft US economic landing could drag the AUD/USD below $0.67. Conversely, a 50-basis point Fed rate cut amid fears of a hard landing could push the AUD/USD above $0.68.
Short-Term Forecast for AUD/USD
Near-term AUD/USD trends will likely hinge on the Fed interest rate decision, economic projections, and press conference. If the Fed cuts rates by 50-basis points and warns about a hard landing, the AUD/USD could break above $0.68. However, investors should also consider Aussie labor market data on Thursday, which may influence the RBA rate path.
Investors should monitor central bank communications closely, which will impact AUD/USD trends.
AUD/USD Technical Analysis
Daily Chart
The AUD/USD hovered well above the 50-day and 200-day EMAs, affirming bullish price signals.
A break above the Tuesday, September 17 high of $0.67687 could support a move toward the $0.68006 resistance level. Furthermore, a breakout from the $0.68006 resistance level may bring the $0.70 level into view.
RBA commentary, the FOMC interest rate decision, FOMC projections, and the FOMC press conference require consideration.
Conversely, a drop below the $0.67500 level could signal a fall toward the $0.67050 support level. A fall through the $0.67050 support level would bring the 50-day EMA into play.
With a 14-period Daily RSI reading of 57.49, the Aussie dollar may climb to the $0.68006 resistance level before entering overbought territory.
