AUD/USD sees a minor rebound from 0.6850 ahead of Fed’s policy

• AUD/USD is expected to continue its five-day losing streak after slipping below Tuesday’s low at 0.6850.
• Investors are cautious as the Fed is expected to elevate its interest rates by 75 bps.
• The Australian economy may have added 25k jobs to the labor force in May.

The AUD/USD pair has witnessed some bids around 0.6850 as the US dollar index (DXY) has entered into a pullback phase after an upside move. The asset displayed a steep fall on Tuesday after slipping below the critical support of 0.6911. A four-day losing streak was carry-forwarded on Tuesday as investors are uncertain over the interest rate decision by the Federal Reserve (Fed).

After the release of a higher print by the US Consumer Price Index (CPI), the market participants have turned more cautious amid advancing odds of a recession situation in the upcoming quarters. The Fed tightened its policy by elevating its interest rates by 75 basis points (bps) in total in its last two monetary policy meetings along with balance sheet reduction. Despite the restrictive quantitative measures, the US CPI landed above the expectations at 8.6%.

Taking into account, higher inflation and a tight labor market, the Fed is expected to dictate a 75 bps rate hike as stronger tightening measures would do the job more efficiently.

On the aussie front, investors are awaiting the release of the employment data. As per the market consensus, the Australian economy has 25k jobs in the labor market vs. 4k reported earlier. Also, the Unemployment Rate will slip to 3.8% from the prior print of 3.9%.