AUD/USD steadies above 0.7400 after RBA-led slump, focus on Fed

• AUD/USD seesaws in a 15-pip trading range after the biggest daily fall in five months.
• RBA’s rejection to rate hike before 2024, YCC move pleased bears earlier.
• Pre-Fed trading lull battles firmer equities, gold’s retreat.
• Second-tier Aussie data will join US ADP Employment Change, ISM Services PMI to entertain traders.

AUD/USD remains sidelined above 0.7400, recently retreating from 0.7430, following the heaviest daily slump since June. That said, the quote stays within a 15-pip trading range between 0.7420 and 0.7435 during the initial Asian session on Wednesday.

With the Reserve Bank of Australia’s (RBA) double whammy of attacks on the hawks, AUD/USD prices dropped heavily post monetary policy decision. Adding to the bearish sentiment were chatters surrounding China’s indirect warning of bad winter and market fears ahead of the US Federal Reserve (Fed) meeting, up for moving markets during today’s North American session.

RBA not only dropped the Yield Curve Control (YCC) but also pushed back the rate hikes till 2024 during the previous day’s monetary policy meeting, allowing traders to consolidate October’s heavy gains. On the other hand, China’s Commerce Ministry urged families to have enough storage of food during the winter on Tuesday.

On the contrary, US stimulus chatters and easing covid numbers in Australia allowed AUD/USD to stabilize around a three-week low. Also putting a floor under the prices was the firmer equities, on the back for strong earnings, as well as downbeat US Treasury yields.

It’s worth noting that the market’s cautious mood ahead of the Fed meeting and an absence of major data/events in Australia helps the Aussie traders to lick their wounds of late.

Looking forward, the quote is likely to remain sidelined, may witness corrective pullback on firmer second-tier housing data at home, ahead of the Fed’s verdict. Though, expectations of Fed tapering may keep exerting the downside pressure on the prices and may please bears should the announcement crosses the $15 billion trimming per the market consensus.

Read: Fed Interest Rate Decision Preview: Inflation, employment and interest rates

Before the Fed, US ADP Employment Change for October and ISM Services PMI for the said month may also entertain traders.

Technical analysis

AUD/USD confirmed a rising wedge bearish chart pattern following the RBA’s verdict to give up the bond yield targeting, as well as pushing back any rate hikes until 2024. Also confirming the quote’s further weakness is the bear’s dominance past convergence of 0.7460 level, comprising the 100-SMA and an ascending trend line from September 29. Looking ahead, three-week-old horizontal support near 0.7380 will precede the 200-SMA level near 0.7360 to lure the sellers.