Australian Dollar Trying to Bounce Ahead of FOMC

The Australian dollar has rallied a bit during the course of the trading session on Wednesday as we are heading into the FOMC meeting. That being said, the market will continue to be very noisy as we try to figure out what the Federal Reserve is going to do going forward. All things being equal, this is a market that I think will have to pay close attention to what the FOMC has to say, and specifically whether or not they are going to continue tightening. At this point, it is very likely that the Federal Reserve will in fact tighten, so I believe that any rally will more than likely be short-lived.

AUD/USD Video 27.01.22

Above, we have the 50 day EMA that will more than likely offer a bit of resistance, and therefore it is likely that we will see a bit of selling pressure in that area. If we can break above there, then the market will more than likely go looking towards the 200 day EMA. Ultimately, a certain amount of exhaustion will be what we sell into, and therefore I think at this point in time it is likely that we will continue to see the overall downtrend. To the downside, the 0.70 level could be an area where we go looking towards if we do get the breakout, so if there is some type of selling pressure, that could be where we end up. All things been equal, this is a market that I think will continue to be highly sensitive to risk appetite, as the Aussie is tied to China and growth. With this, be cautious and look for selling opportunities on exhaustion unless the Federal Reserve completely changes its tone.

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