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Bank of Japan keeps policy unchanged, upgrades FY22 and FY23 inflation outlook to 1.1%

AUD/USD Price Outlook: Aussie Ascends on China Data, FOMC Eyed

AUD/USD Price Outlook: Aussie Ascends on China Data, FOMC Eyed

Rich Dvorak, Analyst

AUD/USD PRICE OUTLOOK: AUSTRALIAN DOLLAR CLIMBS AGAINST USD AHEAD OF FOMC DECISION

AUD/USD is trading on its front foot so far this Tuesday with spot prices higher by about 0.2% intraday. The Australian Dollar is strengthening broadly on the back of solid economic data out of China, which could encourage wait-and-see RBA policy.

AUD/USD PRICE CHART: DAILY TIME FRAME (20 MAY TO 15 SEP 2020)

AUD USD Price Chart AUDUSD Australian Dollar Forecast

Gains notched by spot AUD/USD since bouncing off the 0.7200-price level last week highlights this confluent zone of resistance-turned-support. Also, the Aussie-Dollar continues to generally hold its positively sloped 20-day moving average, which could help sustain the broader bullish trend. This brings potential for a retest of technical resistance underpinned by the 31 August swing high at the 0.7400-handle into focus.

AUD/USD PRICE CHART WITH VIX INDEX OVERLAID: DAILY TIME FRAME (DEC 2019 TO SEP 2020)

AUDUSD Price Chart AUD to USD Forecast September 2020 FOMC Meeting

The Australian Dollar might remain in favor relative to its safe-haven USD peer so long as trader risk appetite remains intact and expected market volatility stays relatively subdued. AUD/USD price action could face headwinds, however, if sentiment sours and causes the S&P 500 VIX Index to rise materially.

Nevertheless, the next direction of AUD/USD stands to be strong-armed by the upcoming Federal Reserve interest rate decision. The FOMC decision is scheduled to cross market wires this Wednesday, 16 September at 18:00 GMT, which will be accompanied by updated economic projections and follow-up press conference spearheaded by Fed Chair Jerome Powell.

Keep Reading - US Dollar Outlook: USD Price Action Focused on Fed Meeting

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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