AUD/USD Forecast: Aussie breaks range after Fed, eyes monthly highs

 AUD/USD Current Price: 0.6662

• US Dollar tumbles after Fed meeting as Treasury bonds jump. 
• Australia’s employment report is due on Thursday.
• The AUD/USD breaks range, looks at monthly highs. 

Following the December Federal Reserve (Fed) meeting, the AUD/USD pair jumped, surging above the 0.6600 level as the US Dollar tumbled. This upward movement suggests that the pair has the potential for further gains and could resume its uptrend after a two-week correction.

As expected, the Fed decided to keep interest rates unchanged. In the staff projections, policymakers foresee three rate cuts for 2024. The dovish forecast has positively impacted Treasury bonds, while the US Dollar tumbled. With the confirmation that the Fed is done with hike rates, there is a room for further short-term weakness of the US Dollar.

On Thursday, the Melbourne Institute will release the Consumer Inflation Expectations report. In November, the one-year expected inflation rate rose slightly to 4.9% from 4.8%. Additionally, the Australian Bureau of Statistics will release the Labour Force report, which is expected to show a positive change in employment of 11,000 in November. This represents a slowdown from the 55,000 jobs added in October. 

Another significant release, early in the Asian session, will be the New Zealand Q3 Gross Domestic Product (GDP) report. In the US, important information is due with the weekly Jobless Claims and Retail Sales reports.

AUD/USD short-term technical outlook

The AUD/USD pair has broken through the key resistance area at 0.6620 and continued its ascent above 0.6650. In the daily chart, the Relative Strength Index (RSI) and Momentum indicators have turned to the upside, while the price remains firmly above important moving averages. The next significant barrier is observed at the December high at 0.6689, above the focus shifts towards the 0.6700 mark. The next resistance is at 0.6720. 

On the 4-hour chart, the rally has pushed the technical indicators, such as the RSI, into overbought territory. However, the momentum remains significantly bullish. As long as the pair stays above the 0.6620 level, further gains are possible. A decline below 0.6570 would negate the positive momentum, and if the pair drops under 0.6550, it would likely test an uptrend line near 0.6500.

Support levels: 0.6620 0.6570 0.6540 

Resistance levels: 0.6680 0.6720 0.6745