By Cecile Lefort and Gyles Beckford
SYDNEY/WELLINGTON, July 29 (Reuters) - The Australian and New Zealand dollars were on a firmer footing on Wednesday as a relief rally in commodities and stocks underpinned sentiment.
The Australian dollar AUD=D4 rose to $0.7340, having bounced more than a cent since touching a six-year trough on Tuesday. The recovery was due to a combination of short-covering, a bounce in equities in Asia and a slight improvement in iron ore prices.
"Short term, the AUD/USD should hold above $0.7320/30 support and make a run at $0.7400," said Sean Callow, a senior currency strategist at Westpac.
Immediate resistance was found around $0.7357 with support at $0.7257.
The Aussie received extra support from a shake out in long euro/Aussie positions with the common currency down at A$1.5084 EURAUD=R . It dropped nearly two cents from a 2015 peak of A$1.5275 set on Tuesday.
Yet, sentiment remained fragile ahead of a policy decision from the U.S. Federal Reserve.
The Fed ends a two-day policy meeting later on Wednesday with markets divided on whether it will take a hawkish or dovish stance, while some suspect it might chose to do neither. No move on rates is expected this week.
Across the Tasman sea, it was a volatile session for the New Zealand dollar NZD=D4 which was last at $0.6711.
It had hit a two-week high after the head of the country's central bank doused expectations of any dramatic easing in policy, though he did call for a further sizable fall in the kiwi and reiterated the likelihood of lower rates. ID:nL3N108011
"We got slightly more hawkish talk than was priced in, and we got more clarity that the bank is not as concerned about the economy as people had priced in," said Westpac senior strategist Imre Speizer.
Markets reacted by trimming wagers on how fast and far rates might fall 0#NBB: and pushing bond yields as much as 6 basis points higher 0#NZTSY= .
Near-term kiwi support is around $0.6660 with resistance at $0.6770. The kiwi also posted modest gains versus most majors, pushing the trade weighted currency basket =NZD 0.3 percent higher.
Australian government bond futures fell, with the three-year bond contract YTTc1 off 4 ticks at 98.070. The 10-year contract YTCc1 was down 4.5 ticks to 97.1600. (Editing by Jacqueline Wong)