The US dollar maintained its declining momentum after the release of the United States (US) inflation data, compared to the Australian dollar which was seen taking advantage of the opportunity to strengthen towards the end of the week's trading session.
The annual US inflation reading eased to 8.5% for July, down from June's 9.1% which hit a 40-year high.
Due to the declining US inflation rate has pushed the US dollar down following the market reaction immediately after the release of the data, giving room for other major currencies to rise again in the market.
The situation has also sparked a surge in stock movements, suggesting investor interest is beginning to increase again in risky assets, while sparking signs of a recovery in market sentiment and favoring high-return currency trades including the Aussie dollar.
Looking at the price movement on the chart of the AUD/USD currency pair, investors saw a surge in the price in the New York session yesterday with the price having recorded a daily increase of up to 160 pips after the horizontal movement of the price below the 0.7000 resistance since the beginning of the week.
The price that has passed the resistance of 0.70000 also surpassed the height reached last week at 0.70400 until it reached the concentration zone of 0.71000 and recorded the latest height of 9 weeks.
However, as soon as it touched the latest high zone, the price started to relax the rising pattern again and continued to move slowly in the Asian trading session today (Thursday) towards around 0.70650.
However, the rebound is seen continuing in the European session trading to retest the 0.71000 zone which is the latest resistance for the price.
If the price manages to continue its upward trend into the next session, the price that broke through the 0.71000 barrier is expected to reach the target level of 0.71800 after the last time the price was above that level in June trading.
On the other hand, the price failed to continue strengthening and the 0.71000 zone remains an invulnerable barrier for the price, the price drop is expected to occur again with the initial price plunge seen to return to the 0.70400 zone which has the potential to be a price support level extending the next increase.
However, if the price maintains the momentum of the decline lower, the price target for the next will go back to the 0.70000 level as well as erasing the profit made in the New York session yesterday.
