AUD/USD bounces off weekly lows, firmly around 0.6950

• The AUD/USD  is trimming some weekly losses but is still down by 1.30%
• Sentiment shifted positive but will remain fragile as the Fed’s decision lurks.
• US Retail Sales dropped more than expected, though it would not change June’s Fed decision.
• AUD/USD Price Forecast: Despite being in a correction, the path of least resistance is downwards.

The Australian dollar stages a comeback vs. the greenback, climbing close to 70 pips on Wednesday amidst an upbeat market mood, ahead of the Federal Reserve monetary policy decision. After reaching a weekly low near 0.6850, the AUD/USD bounces off those lows and is trading at 0.6950 during the North American session.

An upbeat market lifts the AUD/USD; the Fed is next

European and US equities record gains, portraying the market’s risk-on impulse. Nevertheless, the greenback stays in positive territory, up by 0.05%, at 105.525, erasing earlier losses that witnessed the DXY dipping below the 105.000 mark. US Treasury yields dropped, as traders prepared for the FOMC’s decision. Contrarily, the US 10-year Treasury yield slides eight basis points, settling at around 3.395%.

Data-wise, in the North American session, May’s US Retail Sales missed monthly expectations and decreased by -0.3% MoM, lower than April’s downward revision to 0.7%. However, excluding autos and gas, it rose 0.1% MoM but trailed the previous month’s figure. At the same time, June’s NY Empire State Manufacturing Index rose to -1.2, worse than estimations but better than the -11.6 May reading.

During the Asian session, Australia’s Westpac Consumer Confidence Index for June rose by 86.4, lower than the 90.4 expected. “The survey detail shows a clear picture of a slump in sentiment being driven by rising inflation; an associated lift in interest rates; and a loss of confidence around the economic outlook, both here and abroad,” according to the report. Later in the day, the Fair Work Commission granted a $40 per week or 5.2% increase in Australia’s minimum wage.

AUD/USD Price Forecast: Technical outlook

AUD/USD Wednesday’s correction could be short-lived unless the Fed disappoints the market. The major is still downward biased, with the daily moving averages (DMAs) above the exchange rate, positioned in a bearish order, with the short-term below the longer-term ones. Also, the Relative Strength Index (RSI) jumped but will keep bulls unhopeful because it remains in negative territory. Therefore, the AUD/USD path of least resistance is downwards.

That said, the major’s first support would be 0.6900. Break below will send the pair towards June 14 low at 0.6850, which, once cleared, could pave the way and tumble the AUD/USD to the YTD low at 0.6828.