The minutes of the Federal Open Market Committee (FOMC) meeting were released on Wednesday, revealing that “few participants” favored a 50 bps rate hike. This was due to the tight labor market and the fact that inflation risks are tilted upwards. The AUD/USD exchange rate reacted by spiking towards 0.6830 before reversing its path and printing a new weekly low of around 0.6801.
The minutes showed that some Federal Reserve officials wanted a 50 bps rate hike. This came as no surprise as the labor market remains tight, and policymakers’ worries are linked to the upward tilt of inflation risks. The FOMC also agreed that more rate hikes are needed to achieve the Fed’s target and that balance sheet reduction would continue according to the plan.
The AUD/USD 1-hour chart shows a spike towards 0.6832 before the AUD/USD reversed its course, breaching south of the S1 daily pivot point at 0.6825. Volatility has increased and after reaching a low of 0.6808, the AUD/USD is tumbling sharply, eyeing a break below the 0.6700 mark.
From a technical perspective, the AUD/USD is facing immediate support at 0.6800 and 0.6780. If the pair breaks below these levels, it could slide further towards 0.6750. On the other hand, if the pair manages to break above 0.6830, it could test the 0.6850 resistance level.
In conclusion, the FOMC minutes revealed that some Federal Reserve officials wanted a 50 bps rate hike due to the tight labor market and the upward tilt of inflation risks. The AUD/USD reacted by spiking towards 0.6830 before reversing its path and printing a new weekly low of around 0.6801. From a technical perspective, the AUD/USD is facing immediate support at 0.6800 and 0.6780, with a potential break above 0.6830 testing the 0.6850 resistance level.
