Australian Dollar holds its ground ahead of highly anticipated Fed decision

On Wednesday, the Australian Dollar remained stable around 0.7130 against the US Dollar, unchanged for the day. This steadiness was attributed to caution among investors ahead of the Federal Reserve's monetary policy decision. The US Dollar gained support from expectations of a 25 basis point rate increase by the Fed, while Australia's prospects of further rate hikes provided some reinforcement to the AUD.

All eyes were on Fed Chair Kevin Warsh's press conference following the decision, as comments indicating a lack of urgency to tighten monetary policy could weaken the US Dollar and bolster the AUD. In Australia, the Reserve Bank of Australia (RBA) had kept its Official Cash Rate (OCR) steady at 4.35% at its recent three meetings, with market expectations of a potential 50 basis point increase at the next meeting.

This could help contain the AUD's downside risk, though the immediate focus would be on the Fed's message. Technical analysis indicated that AUD/USD was trading below key moving averages and horizontal resistance levels, with potential support at 0.7120 and further downside risk below 0.7108.