AUD/USD struggles to crack through 0.78, FOMC minutes in sight

Earlier in the day, the AUD/USD pair rose above the 0.78 handle for the first time in nearly a week but failed to extend its up-move amid a subdued trading action ahead of the FOMC September meeting minutes. As of writing, the pair was trading at 0.7795, gaining 0.23% on the day.

Although a modest selling pressure witnessed on the greenback provided a boost to the pair in the last hour, it lost its bullish momentum before reaching the 0.78 mark. The US Dollar Index, which failed to hold above the 93 handle on Wednesday, was last seen at 92.90, losing 0.2% on the day.

The only data scheduled to be released from the U.S. will be JOLTS Job Openings for August, which is expected to ease to 6.125 million from 6.170 million in July. However, this data is unlikely to have a noteworthy impact on the price action as investors will be looking for an affirmation of a December rate hike when the FOMC releases its September meeting minutes later in the NA session.

Commenting on the rate hike expectations, "given the decent economic backdrop and potential for a gradual inflation improvement, we expect the Fed to hike again in December. But the big risk at this stage is the politics. The debt ceiling deadline comes days after the December meeting, and if it goes to the wire, the resulting market volatility could persuade the Fed to temporarily hold fire - although that’s not our base case,” said James Smith, Developed Markets Economist at ING. The CME Group FedWatch Tool shows that markets are pricing a 91.7% probability of a rate hike.

• FOMC meeting minutes in focus – Deutsche Bank

Technical outlook

Following yesterday's modest recovery and today's small gains, the RSI indicator on the daily graph started to rise towards the 50 mark, suggesting that the bearish momentum is losing strength. The pair could face the first support at 0.7735 ahead of 0.7690 (200-DMA) and 0.7600 (psychological level). On the upside, resistances align at 0.7800 (psychological level/ daily high), 0.7850 (100-DMA) and 0.7920 (50-DMA).

• AUD: Move lower running out of steam – ING
• Further AUD/USD weakness unlikely – UOB