AUD/USD remains directionless in a tight range

The AUD/USD pair erased most of its daily losses during the first hours of the American session and is down only 0.05% at 0.7567 at the moment. The prevailing cautious mood before tomorrow's FOMC decisions makes it difficult for most pairs to set a direction on Tuesday.

Mixed Chinese data

Despite the increasing selling pressure following the weak retail sales data from China during the Asian session, better than expected industrial production numbers helped the AUD/USD limit its losses. China’s retail sales came-in at 9.5% y/y in Jan, missing the estimate of 10.5%. Industrial production bettered estimates to print at 6.3%, while the urban investment number printed lower than estimates. 

Moody's expects further tightening

The Fed is widely expected to raise interest rates by 25 basis points after its coming meeting, pushing up the federal funds target rate to 0.75% to 1.0%. After this month's meeting, Moody's expects that policy makers will raise rates a further two or three times this year, boosting the fed funds rate target range as high as 1.5% to 1.75%.

Technical outlook

The AUD/USD is facing the first resistance at 0.7600/10 (psychological level/50-DMA), ahead of 0.7632 (Mar. 7 high), and 0.7700 (psychological level/Mar. 1 high). On the downside, the first support is aligned at 0.7515 (Fib. 38.2% of Jan. to late Feb. uptrend) followed by 0.7495 (100-DMA) and finally 0.7450 (Fib. 50%).