The AUD/USD pair declined by about 1% to reach 0.7100 after the Federal Reserve decided to maintain its interest rates. Fed Chairman Jerome Powell also confirmed he would continue serving on the Fed’s board beyond his current term’s end.
Australian dollar dips as US dollar gains traction amidst Fed’s decision and Powell’s remarks
During a recent press conference, Powell commended Kevin Warsh for initiating steps to potentially succeed him as Fed chairman. He stated he would remain in his position until a criminal investigation involving him concludes. Powell mentioned he would adopt a “low profile” as the leader of the Fed and confirmed he would stay on until after May 15, which marks the end of his eight-year tenure.
The Fed’s monetary policy update emphasized the resilience of the U.S. economy, noting that the unemployment rate has remained largely stable in recent months. The report also highlighted rising inflation tied to surging energy prices due to the situation in Iran.
They acknowledged that ongoing Middle Eastern events have heightened economic uncertainty and reassured that policymakers would keep a balanced view in their decision-making.
The vote regarding this decision split 8-4, with Governor Stephen Millan opposing any rate cuts. Others, including Beth Hammack, Neil Kashkari, and Rory Logan, disagreed with the inclusion of an easing bias in the statement.
AUD/USD moves in response to Powell’s announcement about his tenure
The AUD/USD pair continued to slide from around 0.7120, dipping below 0.7110 and eyeing the significant psychological level of 0.7100. A breach of this level could lead to a 50-day simple moving average of 0.7056, with the next target potentially being 0.7000.
