AUD/USD pares early losses, steadies around 0.7770 ahead of FOMC
- AUD/USD fell sharply after soft inflation data from Australia.
- US Dollar Index failed to hold above 91.00 in the second half of the day.
- Eyes on FOMC's policy announcements and Chairman Powell's press conference.
The AUD/USD pair came under strong bearish pressure during the Asian trading hours and dropped to a daily low of 0.7725. With the greenback struggling to find demand ahead of the FOMC's policy announcements, however, the pair managed to stage a rebound and was last seen posting small daily gains at 0.7769.
Focus shifts to FOMC
The data from Australia revealed on Wednesday, that the Consumer Price Index (CPI) in the first quarter fell to 0.6% on a quarterly basis from 0.9%. Moreover, the Reserve Bank of Australia's Trimmed Mean CPI edged lower to 1.1% on a yearly basis and missed the market expectation of 1.2%. The soft inflation figures triggered an AUD selloff and forced AUD/USD to fall sharply.
In the second half of the day, the greenback lost its strength with investors moving to the sidelines ahead of the FOMC's Monetary Policy Statement and Chairman Jerome Powell's press conference. The US Dollar Index, which rose to a daily high of 91.12, is currently down 0.05% at 90.84.
Previewing this event, "the meeting concluding on Wednesday is unlikely to bring any major policy changes and won’t be accompanied by new economic projections," said Capital Economics analysts. "We expect the statement to strike a more optimistic tone on the economic outlook, but Chair Jerome Powell is likely to emphasise in his press conference that any changes to the stance of policy are still some way off."
Technical levels to watch for