AUD/USD trades in lower half of weekly range below 0.7750, eyes on FOMC

• AUD/USD is posting modest daily losses on Wednesday.
• RBA's Kent says they will consider additional bond buying later in the year.
• FOMC will release its updated Economic Projections and Monetary Policy Statement.

The AUD/USD pair closed the day with small losses on Tuesday and seems to be having a tough time staging a meaningful recovery on Wednesday. Nevertheless, the subdued market action ahead of the all-important FOMC meeting doesn't allow the pair to break out of its near-term range either. As of writing, AUD/USD was down 0.13% on the day at 0.7735.

Earlier in the day, the Reserve Bank of Australia's (RBA) Assistant Governor, Christopher Kent noted that Australia's economic outlook, while improved, remains very uncertain. Regarding the policy outlook, Kent said that the RBA will consider ramping up asset purchases later in the year. Meanwhile, the Westpac Leading Index in February improved modestly to 0.02% from -0.1% but this data was largely ignored by the market participants.

DXY stays quiet below 92.00

On the other hand, the greenback stays resilient against its rivals with the 10-year US Treasury bond yield rising for the second straight day and closing in on the yearly highs it set earlier in the week. At the moment, the US Dollar Index is virtually unchanged on the day at 91.85.

Previewing the FOMC event, "Fed Chair Jerome Powell will have a difficult job pushing back against market expectations of higher inflation and earlier policy rate hikes," noted Rabobank analysts. "An upward shift in the dot plot could make his job even more difficult."

If investors start pricing a possible adjustment to the asset purchase program to battle bond market pressures, the USD could start gathering strength and weigh on AUD/USD.

Technical levels to watch for