AUD/USD backed away from session highs after Fed delivered a hawkish rate hike

AUD/USD is feeling the heat of the Fed’s decision to keep the outlook for three rate hikes unchanged despite the weak economic data.

The currency pair clocked a high of 0.7636 before trimming gains to trade around 0.7610 levels. The US dollar is regaining some poise, although the greenback still remains on the back foot, given the treasury yields remain under pressure.

Moreover, today’s move signals the Fed is no longer data dependent and there is a feeling that the Fed is normalizing the policy in order to build firepower to counter the next round of the recession.

The focus now shifts to what Yellen has to say about the economy, inflation and the rate hike path. The Chairman is also likely to offer more insights into how the central bank intends to unwind its $4.5 trillion balance sheet.

AUD/USD Technical Levels

A break above the session high of 0.7636 would expose 0.7679 (Mar 30 high) and 0.77 (zero levels). On the other hand, a breakdown of support at 0.76 (zero levels) would open up downside towards 0.7556 (100-DMA) and 0.7531 (200-DMA).