AUDUSD is slowly trending higher, moving inside a rising wedge pattern visible on its 1-hour and 4-hour charts. Price is testing the resistance and could be due for a move back to support at the .7475 level.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. The 200 SMA lines up with the wedge support, adding to its strength as a floor. However, if a breakdown occurs, a longer-term downtrend could be in the cards.

Stochastic is heading south to show that sellers are in control of price action for now. However, the oscillator is already dipping into the oversold region to show that bearish pressure is about to fade and that buyers could regain control.

The main event risk for the day is the FOMC statement, as the Fed is expected to hike interest rates by 0.25% while making adjustments to their dot plot forecasts and economic projections. Fed Chairperson Yellen might give a few cautious remarks to prevent any excessive risk rallies or profit-taking among bonds and equities.

Earlier in the day, Australia reported a 3.9% slump in Westpac consumer sentiment for December, following the earlier 1.1% drop. New motor vehicle sales were down 0.6% compared to the previous 2.4% slide, indicating that financial confidence is still shaky.

Editor’s Note: Equity investors/traders can use the Currency Shares Australian Dollar Trust (FXA, quote) ETF to take positions in the Aussie dollar without a FOREX account.  The ETF looks to track the price of the Aussie dollar (AUDUSD), minus ETF fee. The fund seeks to reflect the price of the Aussie dollar (AUDUSD) with the shares representing a cost-effective investment relative to investing in the FOREX market.

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