AUDUSD tapped its 10-month highs yesterday after the FOMC hinted that it will maintain its loose monetary policy until 2022. The currency pair rallied to 0.7062 before it finished yesterday’s trading with a 0.25% gain at 0.6997.
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According to Federal Reserve policymakers, they do not see the need to increase interest rates anytime soon. Specifically, until 2022. In addition to this, the central bank also hinted that it will maintain the scope of its QE program and warned that it may even increase its size if needed.
With regards to the labor figures for May, Fed Reserve Chairman Powell acknowledged that they were promising. However, he pointed out that the unemployment rate may not reflect an accurate state of the labor market given the shortcomings of the survey.
AUDUSD Outlook
On the daily time frame, it can be seen that AUDUSD is currently trading around its December 31 highs. The currency pair is now testing resistance around the 0.7000 psychological handle. Because of the shooting star candlestick, the recent price action implies that AUDUSD could struggling to attract more bids around this price level. If sellers dominate trading, a close below the low of June 9’s low at 0.6897 could mean that the currency pair could soon trade lower. Near-term support is at 0.6850. This price coincides with the rising trendline (from connecting the lows of March 19, May 18, and May 26). It also aligns with the 38.2% Fib level when you draw the Fibonacci retracement tool from the low of May 25 to the high of June 10.
On the other hand, a strong bullish close above yesterday’s high at 0.7062 could mean that AUDUSD is on its way to 0.7286. This price coincides with the high of January 2017 and the 200 SMA on the weekly time frame.
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