Bulls crack pivotal resistance zone as Fed is expected to stay on hold
Australian dollar remains bid in Asia / early Europe on Wednesday, underpinned by weaker dollar and rise in Dalian iron ore.
Bulls cracked the lower boundary of strong resistance zone at 0.6807/18 (50% retracement of 0.7157/0.6458 / May 10 high) on Tuesday but was unable to break on the first attempt.
Daily studies are firmly bullish but overbought which may produce additional headwinds and make attempts through pivotal barriers more difficult, however, FOMC decision is likely to be key driver today.
The Fed is widely expected to pull the brake and keep interest rates unchanged for the first time in more than one year of aggressive policy tightening.
Market observers expect a pause in rate raising cycle but with hawkish rhetoric, while focus will be on central bank’s forward guidance, which is likely to determine greenback’s short-term fate.
Sustained break of 0.6807/18 pivots would open way for fresh extension towards 0.6890/0.6915 Fibo 61.8% / weekly cloud top).
Broken 100DMA and Fibo 38.2% offer initial supports at 0.6731/25, followed by converged 10/200DMA’s (0.6689) which are about to form a golden-cross.
Res: 0.6818; 0.6864; 0.6890; 0.6915
Sup: 0.6761; 0.6725; 0.6689; 0.6668