AUD/USD holds onto daily gains ahead of Fed decision

AUD/USD peaked at a daily high around 0.6395 and then settled at 0.6360, still up on the day.
The market’s attention is on the Fed decision later in the session and on Jerome Powell’s comments.
The USD is holding its ground despite the report of weak data.
Australia will report key Trade Balance data in Thursday’s session.

In Wednesday’s session, the AUD/USD gained momentum and rose to a high of 0.6395 and then consolidated towards 0.6360, still holding around 0.30% gains. The short-term trajectory will be dictated by the Federal Reserve (Fed) decision later in the session, where investors will place their bets on the December meeting, potentially increasing the demand for US Dollars.

Earlier in the session, the US reported that Automatic Data Processing Inc. (ADP) reported that Employment Change came in lower than expected in October. The private sector added 113,000 jobs vs the 150,000 expected but higher compared to its last reading of 89,000. In addition, the Institute for Supply Management (ISM) reported that its Manufacturing PMI came in at 46.7 in October, below the 49 expected, and declined from its previous reading of 49. Despite the reports of weak data, the US Dollar is holding its ground, mainly driven by a cautious market mood ahead of the Fed’s decision.

On the Aussie’s side, Australia will report Trade Balance data from September, which is expected to have decelerated. Earlier in the session, Australian housing and industrial came in lower than expected but did not trigger any selling pressure on the Aussie as attention is set on what the Fed decides.

AUD/USD Levels to watch

Observing the daily chart, the outlook is starting to tilt in favour of the bears, but they still have some work to do, which contributes to a neutral to bearish bias. The Relative Strength Index (RSI) has a positive slope below its midline, while the Moving Average Convergence (MACD) prints flat green bars. On the broader scale, the pair is above the 20-day Simple Moving Average (SMA), but below the 100 and 200-day SMAs, suggesting that despite the recent bearish sentiment, the bulls are still resilient, holding some momentum.

Support levels: 0.6350, 0.6330, 0.6270.

Resistance levels: 0.6400, 0.6430, 0.6470.