AUD/USD Price Forecast – Australian dollar rallies on Tuesday in anticipation of FOMC

The Australian dollar has rallied a bit during the trading session on Wednesday, reaching towards the 0.76 level. The market has used the 0.7550 level for major support, bouncing from that area and perhaps trying to break above the 0.7625 level. If we can get above there, the market should continue to go much higher. At that point, I anticipate that the next target would be the 0.7675 handle. Overall, I think that short-term pullbacks offer plenty of opportunities to take advantage of value, as although the FOMC statement will almost certainly suggest that we are going to continue to see interest rate hikes, but the question now is whether the FOMC is going to say something that sounds even more hawkish?

At this point, I don’t think it’s going to, because quite frankly although there are inflationary pressures, there are far too many issues out there that raising interest rates aggressively could cause, not the least of which would be damage to emerging markets as they borrow in US dollars as well. I think the FOMC is going to be steady with its hikes, but also very measured in its implementation. Short-term pullbacks should be nice buying opportunities down to the 0.75 handle underneath. Longer-term charts suggest a massive support level at that area.