AUD - AUDUSD forms double-top ahead of FOMC decision
The AUD/USD price was little changed on Wednesday morning as investors focused on the potential divergence between the Federal Reserve and the Reserve Bank of Australia (RBA). The pair also reacted to the latest economic data from China. It is trading at 0.7100, where it has been in the past few days.
Fed and RBA divergence
The AUD/USD pair has moved sideways recently as investors focus on the Fed and the RBA interest rate decisions.
Last week, the RBA decided to leave interest rate unchanged and continue with its quantitative easing policy for a while. The bank’s goal is to continue supporting the economy as the Omicron variant spreads.
Focus shifts to the latest interest rate decision by the Federal Reserve that will conclude its meeting on Wednesday. The bank is expected to leave the interest rate unchanged at the range of 0% and 0.25%.
At the same time, the Fed is expected to double the size of its asset tapering. This means that it will reduce the size by about $30 billion and aim to conclude the process in the first quarter of the year. Therefore, there is a small divergence between the Fed and the RBA.
The AUD/USD pair is holding steady after the latest economic numbers from China. Data by the country’s statistics agency showed that retail sales rose by 3.9% in November. This was a decline considering that sales rose by 4.9% in the previous month.
Additional data showed that the country’s industrial production rise from 3.5% in October to 3.8% in November. The fixed asset investment declined from 6.1% to 5.2%. These numbers show that the Chinese ecoomy is doing relatively well even as the Covid risks remain.
AUD/USD forecast
The two-hour chart shows that the AUD/USD pair formed a small double-top pattern a while ago. This pattern formed at 0.7185. The pair moved slightly below the 25-day and 50-day moving averages. It has also moved slightly below the neckline of this pattern.
The Relative Strength Index (RSI) has been in a bearish trend. Therefore, the pair will likely keep falling as bears target the next key support level at 0.7030.
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