AUD/USD at fresh 2-year lows ahead of the Fed

• US dollar remains firm on a quiet session ahead of the Fed.
• Focus remains on the FOMC meeting; statement at 19:00 GMT.
• AUD/USD at the lowest level since May 2020.

The AUD/USD failed to recover ground and printed a fresh two-year low at 0.6652. It is hovering around the lows as market participants look at the Federal Reserve.

The combination of a stronger US dollar supported by higher US yields and a cautious tone across financial markets, keeps the AUD/USD under pressure.

Stocks in the Wall Street are up 040% on average, but risk sentiment does not look so positive, particularly after Russian President Putin speech announcing partial military mobilization to fight Ukraine war and mentioned and threatened with a nuclear response.

The focus is set on the Federal Reserve that will announce its decision at 18:00 GMT. A 75 bps rate hike is expected. Chairman Powell's press conference is at 18:30 GMT. A hawkish tone is priced in. US yields and the greenback have been rising prior to the event. The DXY is at multi-year highs above 111.00 and the 2-year yield is above 4.00% for the first time since 2007.

Economic data released on Wednesday showed the seventh consecutive monthly decline in US Existing Home Sales in August. The 0.4% slide pushed the annual rate to 4.7 million, better-than-expectations of a 4.8 million reading.

The AUD/USD continues under pressure. Below 0.6650, the next support might be seen at 0.6600 followed by 0.6580 and 0.6565. To alleviate the bearish pressure, the aussie needs to recover and remain above 0.6680. The next resistance is seen at 0.6730/35 followed by 0.6770.

Technical levels