AUD/USD extends consolidation below 0.7200 handle

• Current account deficit in the U.S. increases more than expected in Q3.
• US Dollar Index stays in the negative territory below 97.
• Coming up: The Fed's interest rate decision.

The AUD/USD pair continues to fluctuate in its 40-pip range since the start of the week and is struggling to determine its next short-term direction. As of writing, the pair was up only 5 pips on the day at 0.7184.

The first data of the day from the U.S. showed that the current account deficit in the third quarter rose to $124.8 billion from $101.2 billion in the second quarter. Although this reading seems to have weighed on the greenback, the currency stays in its range below the 97 mark ahead of the critical Fed meeting. At the moment, the index is down 0.28% on the day at 96.72.

Commenting on the FOMC meeting, “The FOMC is widely expected to hike a further 25bp, taking the target range for the fed funds rate to 2.25-2.50%. The focus for markets will be on to what extent the FOMC follows through on the recent dovish communication shift, and lowers its projections for future rate hikes,” ABN AMRO analysts said.

• FOMC Preview: What 9 major banks are expecting from December meeting?

During the Asian session on Thursday, the Australian Bureau of Statistics will publish its labour market report. Markets expect the employment change to come in at +20K while seeing the unemployment rate unchanged at 5%.

Technical levels to consider

With a decisive break above 0.7200 (100-DMA/psychological level) the pair could aim for 0.7250 (20-DMA) and 0.7320 (200-DMA). On the downside, supports align at 0.7150 (Dec. 14 low), 0.7080 (Nov. 1 low) and 0.7000 (psychological level).