• The Federal Reserve projected another rate increase by year-end.

• The Fed expects rates to decrease by only half a percentage point in 2024.

• Powell expressed confidence that the Fed’s aggressive rate hikes would likely not lead to an economic downturn.

Today’s AUD/USD outlook is bearish as the Aussie extended losses amid a rising dollar. The US dollar inched up against a range of currencies on Wednesday. This rise followed the Federal Reserve’s decision to keep interest rates unchanged but adopt a more hawkish stance. Moreover, the Fed projected another rate increase by year-end.

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Meanwhile, Fed policymakers, much like they did in June, still expect the central bank’s benchmark overnight interest rate to peak this year within the range of 5.50% to 5.75%. However, the Fed’s updated quarterly forecasts indicate a less aggressive approach. The central bank expects rates to decrease by only half a percentage point in 2024, in contrast to the full percentage point of cuts anticipated at the June meeting.

Karl Schamotta, Chief Market Strategist at Corpay in Toronto, characterized the Fed’s action as a “skip” rather than a “pause.” Moreover, he explained, “With the economy performing better than expected and inflation pressures remaining persistent, Fed officials chose to maintain a hawkishly data-contingent bias.”

At the same time, Fed Chair Powell expressed confidence that the central bank’s aggressive rate hikes would likely not lead to an economic downturn. Monetary policy will probably remain somewhat restrictive into 2026. Meanwhile, the economy is projected to grow at a rate close to its estimated trend level of approximately 1.8%.

AUD/USD key events today

Investors are expecting data from the US, including:

• Initial jobless claims.
• The Philadelphia Fed manufacturing index.
• The existing home sales report.

AUD/USD technical outlook: Market sentiment turns bearish.

The AUD/USD price has collapsed on the charts, breaking below the 30-SMA and changing the bias to bearish. The price made a bearish engulfing candle that broke below the 30-SMA and the 0.6440 key level. Moreover, the RSI dipped into bearish territory in the process. 

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Despite the new bearish sentiment, bears must still confirm a bearish trend by making lower lows. At the moment, the price has paused at the 0.6400 support level. If bears are ready to reverse the trend, the price will break below this level to make lower lows.

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• Source: https://www.forexcrunch.com/aud-usd-outlook-feds-hawkish-turn-keeps-usd-on-the-rise/