The Australian dollar underperformed in early trade this week as it eased back down, retreating from the currency's surge last week.
The minutes of the Reserve Bank of Australia's (RBA) monetary policy meeting which was the focus of this morning's Asian session (Tuesday) showed that policy makers are ready to take steps to further tighten central bank policy after raising interest rates by 50 basis points to 1.85% at the meeting earlier in the month. August.
However, policymakers expect inflation to peak this year before falling back to the 2-3% target by the end of 2024.
Apart from that, investors are also looking forward to the release of the Australian employment data report which will be published on Thursday which will also be monitored by the RBA in setting its monetary policy.
Meanwhile for the US dollar currency, the market sentiment which is again considered risky (risk-off) following the publication of Chinese economic data in the Asian session yesterday which collapsed added to investors' worries until the safe-haven currency became attractive again.
Because of that, this situation has given room for the US dollar to hit other major currencies in the market which saw a more significant depreciation including the Aussie dollar.
Investors will also focus on the release of United States (US) retail sales data and also the minutes of the FOMC meeting to evaluate the movement of the US dollar towards the end of the week.
Observing the price movement on the AUD/USD currency pair chart, the price has shown signs of a bearish trend change with the price plunging below the 0.71000 level recording a daily decrease of around 100 pips on Monday yesterday.
Hovering around the 0.70400 ozn, the price continued to move lower in today's trade testing the 0.70000 level so far in the European session.
The lower decline is expected to continue with the price movement having been below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the AUD/USD chart, signaling a bearish trend for the price.
If the price continues to decline below the 0.70000 level, the price will likely return to target up to the support zone at 0.69000 where the zone has managed to contain the lower fall of the price in early August trading.
On the other hand, if the price fails to continue the decline and starts to rise again, the focus is on the 0.71000 resistance zone which will be tested again after the investor evaluates the price trend change.
For a higher move on a more pronounced bullish trend, the price has the potential to reach the high of 0.71800 and record the latest 10-week high.
