- AUD / USD is moving lower after tough FOMC Minutes.
- The bears look for a breakout of the key 0.77 area for lower lows.
The AUD/USD is on the defensive following the minutes of the Federal Open Market Committee. At the time of writing, the AUD / USD is down 0.93% having traveled from a high of 0.7797 to a low of 0.7716.
The Minutes showed that there are prospects for adjustments in the pace of purchases if the economy continues to advance rapidly towards the Committee’s objectives.
Some officials saw that talks about the fine-tuning would begin in upcoming meetings, but noted that the economy remains far from its targets.
However, it was an aggressive enough set of minutes to support a bid in the dollar and push US yields up.
Meanwhile, AUD / USD strengthened days ago after the Reserve Bank of Australia (RBA) minutes on Tuesday.
In general, the rise of raw materials, such as iron ore, one of Australia’s main exports, has also supported the Australian.
That said, there are questions about how sustainable the trade relationship between the nation and China is.
Beijing’s economic planning agency, the National Development and Reform Commission (NDRC), advocates the need to diversify its supply chains for metals and other resources, according to Bloomberg news.
However, the focus is on the here and now.
Analysts at Westpac, while pointing to the risks of trade relations between China and Australia, said that global risk appetite is likely to improve in the coming months given the central bank policy shaping that supports the Australian dollar.
On the positioning data, the net AUD remained in positive territory for the second week in a row.
Overall, Rabobank analysts noted that “despite all-time highs in prices of various commodities, the value of the AUD / USD has remained solid in recent weeks, only rising after surprisingly weak data from the April payrolls in the US undercut the dollar. “
The bank sees the potential for AUD / USD to rise to 0.79 on a 6-12 month outlook, but argued that ” the strength of the RBA’s dovish guidance coupled with mounting tensions between Canberra and Beijing is likely to continue to hold back. the performance of the AUD. ”
AUD / USD technical analysis
Technically, the bears will look for a breakout of the 0.7700 support structure:
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