AUD/USD clears part of its daily gains after Fed's hawkish hold, Powell's presser

• AUD/USD retreated to 0.6485, still holding daily gains.
• The Fed held rates steady at the 5.25%-5.50% range as expected.
• Jerome Powell sounded neutral during its press conference.

The AUD/USD retreated to 0.6480 from 0.6500 but still holds 0.30% daily gains following the Federal Reserve (Fed) policy statement and Chair Powell's press conference.

The US Federal Reserve, in its September policy meeting, has opted to keep the federal funds rate unchanged within the range of 5.25% to 5.5%, aligning with market expectations. The Fed's policy statement acknowledged continued economic expansion but noted a slowdown in job gains, though they remain robust. The central bank emphasized that inflation remains elevated, underscoring their cautious stance regarding inflation risks. Additionally, the revised Summary of Economic Projections (SEP), reflected in the dot plot, indicates policymakers foresee one more 25 basis points rate increase by year-end.

During his press conference, Jerome Powell maintained a neutral stance. He refrained from committing to another hike and said that the bank would proceed "carefully" meeting by meeting and that the next decisions would be decided on the totality of the incoming data. That being said, Powell commented that if needed, the bank prepared to raise rates further but that the lags of monetary policy and their impact on the economy will be considered in the next meetings.

As a response, the US 2 and 5-year bond yields soared to multi-year highs of 5.12% and 4.51%, respectively, while the 10-year rate stands at 4.34%. The US Dollar, measured by the DXY index, initially rose to 105.20 and then settled at 105.00.

AUD/USD Levels to watch 

 Upon evaluating the daily chart, a neutral to bullish outlook for the short term is seen, with the bulls gradually recovering their strength. With an upward trend above its midline, the Relative Strength Index (RSI) points towards a bullish sentiment, while the Moving Average Convergence (MACD) histogram exhibits larger green bars. In addition, the pair is above the 20-day Simple Moving Average (SMA), but below the 100 and 200-day SMAs, suggesting that despite the recent bearish sentiment, the bulls are still resilient, holding some momentum.

 Support levels: 0.6450, 0.6430 (20-day SMA), 0.6400.

 Resistance levels: 0.6500, 0.6520, 0.6550.

AUD/USD Daily Chart