Unexpectedly, prices could soar this week. Yet that is what happened to the AUD/USD currency pair chart which belied expectations for a price decline by investors.
Why do investors expect price declines to happen earlier?
The Federal Reserve (Fed) had previously forecast to raise interest rates from 0.25% to 0.50%, and that’s what happened at the FOMC meeting earlier this morning, in line with market forecasts.
Still, the US dollar which is expected to strengthen after a rate hike by the Fed instead moved gloomily ending the New York market session.
It is likely that market players will first take profits on previous US dollar buying positions, to take advantage of US dollar gains at the best price after this, with expectations for the US dollar to strengthen for a longer trading period.
Thus, the price which was initially pressed lower to the level of 0.72100 following the initial reaction to the results of the FOMC meeting finally bounced back to the high of 0.72900.
With the bullish pattern displayed, the Aussie dollar continued to be supported by the Australian jobs report published during the Asian session this morning, with the data component readings being encouraging.
The rise continued up to the level around 0.73200 which is the latest resistance for the price and the flat price around it continued at the beginning of the European session.
A higher rise is expected to test the resistance at 0.73600 first before continuing the climb towards the 0.74000 high zone reached early last week.
But if the US dollar ‘wakes up’ again to strengthen again, investors will be prepared to expect prices to plummet.
A further drop below the 0.72800 level will test the zone around 0.72300 which was also tested early this morning after the FOMC meeting.
The continued decline is seen to test the support zone of 0.71800 after giving a signal to continue the price movement on the bearish trend.
