AUD/USD declines as US Dollar holds firm after Fed keeps rates unchanged

• AUD/USD dips to 0.6340 as the US Dollar remains resilient post-Fed decision.
• The Federal Reserve leaves interest rates unchanged at 4.5%, aligning with market expectations.
• FOMC dot plot signals rate cuts ahead, with 2025 median forecast revised lower to 3.375%.

The AUD/USD pair retreats toward 0.6340 in the aftermath of the Federal Reserve's monetary policy decision, as the US Dollar (USD) remains firm. The Fed held interest rates steady at 4.5%, in line with expectations, while signaling a cautious outlook amid inflation and economic uncertainties.

The latest FOMC dot plot revealed that policymakers project a median rate of 3.875% for the current period, down from the previous 4.375%, reinforcing expectations of a policy easing cycle. The 2025 rate forecast was also revised down to 3.375%, while GDP projections for next year were cut to 1.7% from 2.1%, suggesting a slowdown in economic growth.

Despite the dovish long-term outlook, the US Dollar Index remains stable near 104.00, limiting the Aussie's upside. The Fed also announced a slower pace of balance sheet runoff starting in April, adjusting its quantitative tightening strategy. In addition, the Fed's sentiment index on the daily chart holds in dovish terrain meaninig that markets are taking the bank's stance as dovish.

AUD/USD daily chart