• AUD/USD fails to extend Tuesday’s rebound despite refreshing daily top of late.
• Market sentiment remains mildly positive but cautious mood ahead of FOMC tests buyers.
• RBA pleased bulls but Fed needs to validate further upside.

AUD/USD pierces the 0.7100 threshold to renew its intraday high during a mostly quiet Asian session on Wednesday.

The Aussie pair rallied the most in two weeks the previous day on the Reserve Bank of Australia’s (RBA) higher-than-expected rate hike, as well as the US dollar pullback during the pre-Fed consolidation. The latest rebound, however, remains doubtful ahead of the key data/events scheduled for publish during the day.

Among them, Australia’s TD Securities Inflation for April, prior 4.0% YoY, as well as Retail Sales for March, expected 0.6% versus 1.8% prior, will be the immediate catalysts to watch. Following that, the US ISM Services PMI for April may entertain the AUD/USD traders. However, major attention will be given to how the US central bank (Federal Reserve) will respond to the recently heavy inflation fears.

Read: Fed May Preview: 'Less hawkish' is the new dovish

On Tuesday, the RBA raised the benchmark rate to 0.35% versus an expected lift to 0.25%. The Aussie central bank also signaled further moves ahead while citing inflation fears and economic resilience. Also supporting the AUD/USD prices was the US Dollar Index (DXY) pullback as traders brace for the Fed’s widely anticipated 0.50% rate lift, with hidden hopes of doing more than expected to save the US dollar.

That being said, global markets remain mostly sidelined amid a holiday in Japan and China. Even so, risks emanating from Russia and China, due to Ukraine’s invasion and covid resurgence, probe the AUD/USD buyers.

Technical analysis

AUD/USD recovery remains elusive until crossing March’s low of 0.7165. The downside move, however, has a bumpy road before hitting the yearly low surrounding 0.6965.