The market for the AUDUSD currency has been teeming with crucial events in the past week, from the fears of a banking crisis to the RBA March meeting minutes. Uncertainty has driven the volatility as traders desperately tried to navigate the precarious conditions. However, as the US Treasury Secretary put minds at ease by stating that the banking sector remains stable, eyes have turned to the US Fed, due to deliver their interest rate decision on Wednesday. 

The RBA meeting minutes revealed a rate hike pause on the cards for the Australian economy in their March meeting. Even though the decision was made to stick with a 25bps hike, the likelihood of a pause in their next meeting is growing. The AUDUSD currency pair did not experience significant downside, though, as the US dollar subdued with the market awaiting clarity on the direction the Federal Reserve will opt for. It is widely expected that a 25bps hike will be announced today, but if the market has taught traders one thing, it’s that nothing is certain. 

Technical 

As the US dollar ticked lower, the AUDUSD pushed through the daily pivot point on Wednesday, where it is now approaching the downtrend resistance of a symmetrical triangle formation. Technical indicators point to bullish momentum, which could see a resistance test at $0.6712 (R1) leading up to the decision. However, the currency pair will likely continue consolidating within the triangle with low volumes until the market receives further clarity. 

If the Fed delivers the widely expected 25bps hike, the currency pair could see a halt in the bullish momentum for a reversal back to the pivot point at $0.6681. A downside breakthrough could lead the bears toward resistance at $0.6668. If momentum allows another leg down, a runway could be opened toward $0.6635 (S1) and $0.6609, with traders pricing in the more hawkish decision. 

On the other hand, if the Fed surprises the market with a pause, the currency pair could test the resistance at $0.6712 and $0.6731 on bullish momentum. However, there is a possible upside cap on the currency pair, with a dovish RBA weighing on the Australian dollar’s ability to generate more momentum. 

Summary 

As the banking fears start to ease, eyes will turn to the US Fed and its interest rate decision today. If the decision aligns with the general 25bps consensus, the currency pair could test the pivot at $0.6681. If the bears gain momentum, a breakthrough could lead them to $0.6635 and $0.6609. 

Sources: Koyfin, Tradingview