The AUDUSD pair rebounded yesterday after the Reserve Bank of Australia lifted its official cash rate for the first time in more than a decade in response to surging inflation and signaled more rate increases to come. The pair may experience increased volatility as investors brace themselves for today’s FOMC decision. Investors see a 100% chance of a 50-bps rate hike in each of May, June and July, with the main Fed rate expected to rise to 2.75% at the end of the year. If the Fed turns out to be less hawkish than expected, then upward correction could be extended to local resistance at 0.7200, which is marked with previous price reactions. On the other hand, if the central bank decides to sharply increase the pace of its tightening cycle, then this may provide additional fuel for the US dollar and support at 0.7060 may be at risk.

AUDUSD, D1 interval. Source: xStation5