AUD/USD bears attack 0.7090 support, China data dump, Fed Interest Rate Decision eyed

• AUD/USD stays depressed around weekly bottom, further downside hinges on monthly support break.
• Mixed updates of Omicron and stimulus hopes battle fears of Fed rate hike, China news.
• Wall Street closed lower but yields, DXY benefit from risk-off mood.
• Aussie Westpac Consumer Sentiment, China economics may entertain traders but it’s all about Fed today.

AUD/USD extends the two-day downtrend to 0.7100, again challenging fortnight-long support during early Wednesday morning in Asia.

Market’s risk-off mood joins the latest covid outbreak in Australia and challenging details from China and the US to weigh on the Aussie pair of late. Above all, anxiety ahead of today’s Federal Open Market Committee (FOMC) and key data from top customer China weigh on the risk barometer pair.

Sentiment sours as markets brace for the US Federal Reserve’s (Fed) verdict with hopes of faster tapering and a higher dot-plot suggesting sooner rate hikes. Adding to pessimism, which in turn weighs on the AUD/USD prices, was the strong reading of the US Producer Price Index (PPI) for November that refreshed the record top to 9.6% YoY, versus the previous 8.6%.

Other than the Fed-linked fears, mixed updates concerning the virus outbreak also roil the risk appetite and favor the AUD/USD sellers. Australia’s most populous state New South Wales (NSW) registered a 50% jump in daily covid cases for Monday, also marking the Omicron case with a flyer at Brisbane airport. The UK reported the first Omicron-linked death while China also conveyed the presence of the COVID-19 variant at home. Alternatively, vaccine news was positive and so did the market talks signaling that the current coronavirus strain, Omicron, is less harmful and can be overcome.

Elsewhere, the US Senate approved a bill to raise the debt ceiling by $2.5 trillion whereas President Joe Biden also sounds hopeful of getting his Build Back Better (BBB) plan through the House in 2021.

Furthermore, China’s Shimao Group fired another bolt to worry for the Beijing-based markets, adding more pains for the Chinese real-estate and economy. On the same line were recently worsening geopolitical ties among the US-China and the Washington-Tehran.

Amid these plays, Wall Street closed in red and the US Treasury yields helped the US Dollar Index (DXY) to print gains ahead of the key day.

Before the Fed’s verdict, Australia’s Westpac Consumer Confidence for December and China’s data dump, including mainly the Retail Sales and Industrial Production, will entertain the AUD/USD traders. Given the mixed expectations from the scheduled data and likely pre-Fed caution, the quote may remain lackluster, pressured though, heading into today’s FOMC.

Read: Fed Interest Rate Decision Preview: Can the FOMC satisfy and mollify the markets?

Technical analysis

AUD/USD defends 0.7090 support, comprising a 15-day-old horizontal line, amid bearish MACD signals and downbeat RSI. Given the quote’s multiple failures to rise past September’s low surrounding 0.7175, sellers are likely firming grips. That said, the 100-SMA level of 0.7135 acts as an immediate upside hurdle.