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AUD/USD: Bearish engulfing day, downside risks building up

FXStreet (Bali) - The AUD/USD sell-off initiated post FOMC has accelerated once again around the Tokyo open, sending the Aussie to a new low circa $0.8760 as the market re-prices higher chances of an early tightening cycle by the Fed.

In recent weeks, the Aussie market had entered a phase of consolidation, with non-commercial accounts paring back some of its huge USD long positions amid a less favourable landscape for early rate hikes by the Fed, with projections pushed further ahead towards Q3 2015. However, Wed's statement, which saw a Fed downplaying disinflationary concerns while noting that "underutilization of labor resources gradually diminishing", has again shifted the focus for early tighter polices (H1 2015), and as a consequence, risks are building up for a resumption of the USD bull trend.

Valeria Bednarik, Chief Analyst at FXStreet, notes: "The pair maintains the bearish bias in the short term: the 1 hour chart shows price accelerated strongly down also below its 20 SMA while indicators head lower deep in the red. In the 4 hours chart price stands below a still bullish 20 SMA, while indicators lost the latest bullish strength but remain in positive territory: a break through 0.8770 will likely see the pair down to 0.8730 in the short term, while sellers will likely surge on approaches to 0.8820 resistance."

USD/JPY: Bulls firmly in control post FOMC

USD/JPY continues to build up on recent gains, with Wednesday's FOMC-motivated spike reaching its highest at 109.00, where a smattering of selling orders has now caused the pair to retreat some 20 odds pips towards 108.80 ahead of the Tokyo open.
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