AUD/USD climbs above 0.7000 as USD selloff intensifies
- AUD/USD gains traction and rises above 0.7000 following Tuesday's correction.
- US Dollar Index extends slide to fresh multi-month lows near 96.00.
- FOMC is expected to keep its policy rate unchanged.
The AUD/USD pair snapped its eight-day winning streak on Tuesday and lost around 50 pips. However, the broad-based selling pressure surrounding the greenback allowed the pair to regain its traction on Wednesday. As of writing, AUD/USD was up 0.77% on the day at 0.7015.
Earlier in the day, the Westpac Consumer Confidence in Australia dropped to 6.3% in June from 16.4% in May but was largely ignored by the market participants. Meanwhile, the data from China revealed that the Consumer Price Index fell to 2.4% on a yearly basis in May.
Unabated USD selloff lifts AUD/USD
In the absence of significant macroeconomic data releases from the US, the bearish pressure surrounding the Treasury bond yields weighs on the greenback. The 10-year T-bond yield lost 3% and 5.5% on Monday and Tuesday, respectively, and was last seen down 3.3% on the day. The US Dollar Index, which tracks the greenback's performance against a basket of six major currencies, is testing 96.00 for the first time in three months, losing 0.4%.
In the second half of the day, the FOMC will announce its interest rate decision and will release its policy statement alongside the updated economic projections.
Previewing this event, “the Fed responded with an extraordinary set of measures to support the economy and financial system. We do not expect additional measures in the near-term," said ANZ analysts. "Chair Powell will emphasise the highly uncertain outlook and express his worry about the possible damage to the economy’s longer-term capacity."
Fed Preview: Nine major banks expectations.
Technical levels to watch for