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AUD/USD: Sold off 0.72, support 0.7180 holds

FXStreet (Bali) - AUD/USD saw a fade breakout off 0.72 handle in early Tokyo trading, after a session high of 0.7210 achieved, with some option selling interest reportedly pressuring the Aussie, which has led to over 30 pips wort of selling.

Support at 0.7150/60 in sight?

Not only the retracement saw the rate descend towards 0.7180 support but the level has now been marginally broken, with the exchange rate now exposing next horizontal support around 0.7150/60, a level that also aligns with and Wednesday's point of control (highest volume node of the day). If failure to break through 0.7180, 0.72 might be re-exposed.

FOMC to determine next bias

The much-awaited Sept FOMC is going to set the tone for the rest of the week. While the market may see an overdone reaction to the Fed's decision, whichever that is (rate hike or not), the market will pay the most attention to tightening projections going forward, in order to determine if any initial USD strength/weakness may have substance behind or should be faded. As odds stand, based on the Setp Fed fund rates via CME, the probability assigned to a Sept rate hike is 30%.

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