AUD/USD consolidates near 0.6800 mark, eyes FOMC minutes for fresh impetus

• AUD/USD consolidated its recent losses and languished near a two-year low set on Tuesday.
• Recession fears, weaker commodity prices acted as a headwind for the risk-sensitive aussie.
• Aggressive Fed rate hike bets continued underpinning the USD and contributed to capping.

The AUD/USD pair struggled to capitalize on the previous day's late rebound from over a two-year low and attracted some selling near the 0.6820 area on Wednesday. The pair remained on the defensive through the early European session and was last seen trading around the 0.6800 mark, nearly unchanged for the day.

Despite the Reserve Bank of Australia's anticipated move to hike interest rates by 50 bps on Tuesday, the worsening global economic outlook acted as a headwind for the risk-sensitive aussie. In fact, a more aggressive move by major central banks to curb soaring inflation, the ongoing Russia-Ukraine war and the latest COVID-19 outbreak in China have been fueling recession fears. Apart from this, the recent slump in commodity prices weighed on the resources-linked Australian dollar.

On the other hand, the US dollar stood tall near a two-decade high and continued drawing support from expectations that the Fed would retain its faster monetary policy tightening path. This was seen as another factor that contribute to capping the upside for the AUD/USD pair. The downside, however, seems cushioned, at least for the time being, as traders might prefer to move on the sidelines ahead of the FOMC monetary policy meeting minutes, due for release later during the US session.

Market participants will look for fresh clues about the Fed's policy outlook. Apart from this, the closely-watched US monthly jobs report, due on Friday, will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the AUD/USD pair. In the meantime, the broader market risk sentiment could allow traders to grab short-term opportunities around the major. Nevertheless, the fundamental backdrop supports prospects for further near-term losses.

Technical levels to watch