• US Stocks extend post-FOMC rally.
• Dollar gains momentum during American session, DXY off monthly lows.
• AUD/USD corrects lower, hovers around 0.7100.

The AUD/USD dropped further during the American session hit a fresh daily low at 0.7068, slightly above the level it had before the FOMC statement. The pair is hovering around 0.7100, attempting to recover that area. The greenback gained momentum across the board during the last hours. The NFP is due on Friday.

Equity markets are up again on Thursday, extending the post-Fed rally and also following rate hikes from the Bank of England and the European Central Bank. At the same time, bond yields are down sharply. Despite risk appetite and lower yields, the US Dollar rose sharply on American hours.

The US Dollar Index is up by 0.30%, recovering from multi-month lows. At the same time, gold and silver are making a sharp reversal.

Weaker commodity prices and a stronger Dollar pushed AUD/USD away from the seven-month high it reached earlier on Thursday at 0.7157.

From a technical perspective, if the AUD/USD consolidates well below 0.710 there would be a deterioration in the outlook for the Aussie. The next support is seen at 0.7060 followed by 0.7030. The pair needs to recover initially 0.7100 and then hold above 0.7130 to keep the doors open to fresh cycle highs.

Technical levels