The AUD/USD pair kept getting better on Wednesday, a week after hitting a low of 0.6985. Early in the European session, spot prices go up to 0.7075, but they are likely to stay low until the big central bank event risk.

After a two-day meeting on Wednesday, the Fed is likely to slow the rate of rate hikes. On Tuesday, data from the US showed that labor costs went up less than expected in the fourth quarter, which helped to support a 25 bps lift-off. Recent macroeconomic statistics for the US show that the economy is in good shape, so the Fed should keep its aggressive approach.

So, most people will pay attention to the policy statement and Fed Chair Jerome Powell’s press conference after the meeting. Investors will keep an eye on the Fed’s rate-hike plan to figure out how the US dollar’s price moves and what the near-term trend will be for the AUD/USD pair. A small drop in the USD helps the major currency go up during the day.

But bulls might not bet on the risk-sensitive Aussie if the mood on the stock market is only slightly negative.

Conclusion

This means that strong follow-through buying should confirm the AUD/USD pair’s drop from its highest level since June 2022. Traders now pay attention to ADP, ISM Manufacturing PMI, and JOLTS Job Openings.