Fed raises rates by 25 bps, as expected.
US yields and Dollar tumble on initial reaction; before Powell.
AUD/USD testing key resistance around 0.6730
The AUD/USD jumped to 0.6727 after the decision of the Federal Reserve, hitting a fresh daily high. It is testing the critical resistance zone around 0.6730 amid the broad-based Dollar’s weakness.
The Federal Reserve (Fed) raised its key interest rate by 25 bps as expected to 4.75%-5.00%. The vote was unanimous. The Fed warned that inflation remains elevated while at the same time dropping the forward guidance toward further rate hikes. The central bank said it was too soon to assess the impact of the banking crisis on the economy.
The greenback tumbled together with US yields. The US 10-year fell to 3.50% before bouncing to 3.53% while the 2-year reached momentarily levels under 4.00%.
Wall Street indices reacted to the upside; however, they have retreated a bit during the last minutes. The improvement in market sentiment offers extra support to the AUD/USD.
Fed Chair Powell is about to start its press conference. If his words align with the statement, the US Dollar could continue its slide, boosting AUD/USD above the key resistance zone of 0.6730.
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