AUD/USD rises on Fed uncertainty ahead of Australian CPI and FOMC decision

AUD/USD extended gains to 0.6580, up 0.6% (40 pips) in early Asian trading as USD weakness persisted ahead of Wednesday's crucial FOMC meeting and Australian inflation data. Markets are positioning for potential dovish surprises from the Federal Reserve, with futures pricing a 35% chance of a rate cut despite recent economic resilience. The Australian dollar found additional support from steady commodity prices and expectations that Tuesday's Australian CPI could show inflation remaining above the RBA's target range. Technical indicators suggest bullish momentum with RSI at 62 and price action above both 50-day (0.6540) and 200-day (0.6510) moving averages. Immediate resistance lies at 0.6600, followed by 0.6635. A hawkish Fed surprise could quickly reverse gains, targeting support at 0.6550. Traders are advised to watch for volatility spikes around both the Australian CPI release and FOMC announcement, which could determine AUD/USD's direction for the remainder of the week.