AUD/USD tumbles as Fed keeps rates in check, Powell on the spotlight

• Fed keeps rates steady; two Governors voted for a 25-bps cut.
• Statement flags "elevated uncertainty" and moderate growth in H1.
• EUR/USD trades choppy near 1.1475, eyes key support at 1.1450.

The AUD/USD plunges on Wednesday, extending its agony for fourth straight days after the Federal Reserve (Fed) decision to hold rates, thought not unanimously as two officials Waller and Bowman, who telegraphed their intentions before the blackout period, dissented and voted for a 25 bps rate cut. At the time of writing the pair trades volatile within 0.6448, down 0.76%.

In its latest policy statement, the Federal Reserve noted that economic activity has moderated during the first half of the year, while the unemployment rate remains low and inflation is described as "somewhat elevated." Officials reiterated their commitment to achieving maximum employment and bringing inflation back to the 2% target, while emphasizing that "uncertainty about the economic outlook remains elevated."

The Fed also confirmed it will continue reducing its holdings of Treasury securities, agency debt, and mortgage-backed securities. Markets now shift focus to Fed Chair Jerome Powell's press conference, which is currently underway.

AUD/USD reaction to Fed's decision

The AUD/USD trades volatile within the 0.6454-0.6471 range set by the reaction to the Fed's decision, capped on the upside by the 0.6500 figure ahead of the 50-day SMA at 0.6536. If Chair Powell turns dovish during the Q&A, expect a test of higher prices.

Conversely, a hawkish reaction paves the way to test the day's low of 0.6424, where the 100-day SMA lies, followed by the 0.6400 mark and the 200-day SMA at 0.6394.