AUD/USD jumps on dovish Fed and takes out the 55 day ma at 0.7131, for a high of 0.7147

• AUD/USD has rallied on a softer dollar with the Fed confirming that there will no rate hikes this year and only one in 2020. 
• AUD/USD is currently trading at 0.7137 between a range of 0.7056 and 0.7140 so far. 

The dollar is on the backfoot across the board from a *dovish Fed outcome - (DXY -0.43% holding at 96 the figure, so far, down from a high of 96.57).

Key notes from the Fed:

• Federal Reserve cuts 2019 GDP forecast to 2.1% vs 2.3% in December.

The latest median Federal Reserve forecasts

• 2019 GDP vs 2.3% in Dec.
• 2020 GDP 1.9% vs 2.0% in Dec.
• 2021 GDP 1.8% vs 1.8% in Dec.

From the statement

Federal Reserve issues FOMC statement - March 20 - full text

• On a 12-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2 percent.
• On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little change.
• The Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent.
• The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes. 
• In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.

 - *Overall, that's all rather dovish!

• We now await Fed Powell in 10 minutes time who will host a news conference.

Whats next for the Aussie?

Australia’s job-market data will be watched closely following the Reserve Bank of Australia’s (RBA’s) comment in its meeting minutes that “developments in the labour market were particularly important”.

Analysts at TD Securities offered a preview:

• We maintain that job-market deterioration will be a key driver of the RBA’s next move, which we believe will be a cut; this has been our view since July 2018 (see Australia – Slow burn and Australia – We see rate cuts in November, December). However, we expect the central bank to remain on hold despite increasing market pressure, until it sees significant and consistent deterioration in the labour-market data. A single weak data point in this notoriously volatile series, especially following a prolonged period of strength, may not be sufficient to prompt a rate cut.
• Falling house prices will weigh further on construction activity in the medium term, in our view. While ongoing projects will likely continue until Q3-2019, there are few new projects in the pipeline. Falling construction activity could lead to significant joblosses in the construction space; a large portion of over 100,000 construction jobscreated in 2017 will likely be lost.
• We expect the unemployment rate to pick up significantly from its current lows, but not yet. The labour-market data’s inherent volatility means the central bank will likely require consistent and significant data deterioration to cut rates; they would likely discount a single bad print. However, we expect the markets to be more responsive to bad data, while discounting any positives.

AUD/USD levels

AUD/USD is taking on the 55 day ma at 0.7131 and has overcome the near term resistance line at 0.7126. However, analysts at Commerzbank explained that their Elliott wave counts are negative and we look for failure in this zone and a slide to 0.6983/50, which should hold:

"This is the 61.8% retracement of the move up from January 2019 and a support line (from January) and we look for this to hold. Above the 55 day ma and downtrend lie .7207 (end of February high) and the .7219 200 day ma. Price action in January was exhaustive – the market charted a hammer (reversal). This suggests the down move ended at .6738. Above .7295 will target the .7394 December high."