AUD/USD rose as the Reserve Bank of Australia (RBA) announced a 0.25% rate hike last week.
However, the momentum may not last long as the Federal Reserve (Fed) will meet this week to discuss their own actions on interest rates, which markets await very eagerly.
Preliminary forecasts and signals indicate a likely pause in the Fed's rate increase, which may result in modest growth in US Treasury yields. This will offset the losses in dollar and limit the rise of AUD/USD.
Additionally, concerns about a global economic downturn, especially in China, may limit the decline in dollar. Traders may also refrain from aggressive purchases of the pair, waiting for key consumer inflation data from the US. This, together with the FOMC decision on Wednesday, will determine the movement of the pair.
Most likely, the price will reach the level of 0.6800. However, before making further decisions, traders should wait for a breakout and a close. If that occurs, the next target could be the zone of 0.6865-0.6870 on the way to the round figure of 0.6900.
Bulls may seek to reclaim the psychological level of 0.7000, with some intermediate resistance in the area of 0.6970-0.6975.
