At first, it was a case of markets not believing the Fed. But to be fair, equities did heed the warning with Wall Street finishing lower yesterday despite a modest recovery to be in the black at one point. And as we see a continued drop in stocks today in Europe, it is taking other major currencies along with it as the dollar runs higher.
AUD/USD is the biggest loser on the day now as we see equities falter, down over 1% to 0.6780-90 levels currently:
The pair came close to running into a test of its 200-day moving average (blue line) this week, following the softer US CPI data but it has pretty much unwound all of that move in a drop back below its 100-hour moving average at 0.6805 as well.
In the bigger picture, price action is very much caught in the ping pong range in between its 100 (red line) and 200-day moving averages. The next key directional break in the pair will come from a break on either side of that range.
For now, sellers are regaining back some appetite and if we do see a further push below the 200-hour moving average at 0.6770 this week, expect there to be appetite to take a run at the 100-day moving average next.