AUDUSD broke down from its wedge formation after the FOMC statement but signs of a correction are materializing. 

Applying the Fib tool on the breakdown move shows that the 50% level lines up with the broken wedge support at the .7450 minor psychological level.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance might still be to the upside. These moving averages are close to the 61.8% Fibonacci retracement level, which could be the line in the sand for any retracement.

Stochastic is moving up from the oversold zone to suggest a return in buying pressure. This could keep the correction going or draw more buyers to the mix so that the longer-term uptrend resumes. If sellers return, AUDUSD could head back to its previous lows at .7380 or lower.

The FOMC hiked interest rates by 0.25% as expected to a range of 0.50-0.75% and signaled room for three interest rate hikes next year. This reflects a more hawkish stance compared to their September forecast of two interest rate hikes in 2017. Also, Fed officials upgraded their growth and jobs forecasts for next year while maintaining inflation estimates.

According to Fed head Yellen, the US economy is growing at a moderate pace and further improvements are expected in the labor market. Market-based measures of inflation are also higher since the start of the year. She mentioned that the incoming Trump administration’s fiscal plans have been incorporated in their economic forecasts but that they can’t speculate how these policy changes might affect their outlook and bias.

As for Australia, economic reports have been mixed. Hiring rose by 39.1K versus the projected 17.6K figure but the unemployment rate rose from 5.6% to 5.7% in the same month. MI inflation expectations improved from 3.2% to 3.4% but Westpac consumer sentiment reflected a sharp 3.9% slide for December.

By Kate Curtis from Trader’s Way