AUD/USD clings to modest gains but lacks follow-through beyond 0.7200 handle
• Persistent USD selling bias helps regain positive traction on Wednesday.
• Bulls struggled to capitalize on uncertainty over the Fed’s policy outlook.
• All eyes remain glued to the latest FOMC policy decision, due later today.
The AUD/USD pair caught some fresh bids on Wednesday, albeit continued with its struggle to make it through the 0.7200 handle.
After yesterday's late pull-back, the pair regained positive traction for the third consecutive session and remained supported by the prevalent US Dollar selling bias. Uncertainty over the Fed's rate hike path in 2019 kept the USD bulls on the defensive and was seen lending some support to the major.
The overnight slump in crude oil prices further fueled concerns over the global economic growth and reinforced market expectations that the Fed might slow the pace, or even halt its rate hike cycle after the highly anticipated Dec. monetary policy meeting, ending today.
The pair, however, has failed to capitalize on the broad-based USD weakness as investors now seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of the FOMC announcement, scheduled later in the day.
Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair might have already bottomed out, and positioning for any meaningful near-term up-move.
Technical levels to watch
Momentum beyond the 0.7200 handle is likely to confront some resistance near the 0.7220-25 region (50-day SMA), above which the pair is likely to aim towards testing the 0.7245-50 supply zone. On the flip side, the 0.7170-65 region now seems to have emerged as immediate support, which if broken might turn the pair vulnerable to accelerate the fall towards 0.7140-35 intermediate support en-route the 0.7100 handle.