The Australian dollar is seen to be trading better than the US dollar, which is now experiencing a more severe decline after the market reacted negatively to the release of the United States (US) NFP employment data report at the end of last week.
Despite the positive outlook, investors still need to be wary of the Australian dollar following expectations that the central bank's monetary policy setting is likely to be looser.
This follows the results of the previous policy meeting which saw the Reserve Bank of Australia (RBA) set a lower interest rate hike than forecast last October, and at the early November meeting, interest rates were raised more slowly.
It can be examined the price movement on the AUD/USD currency pair chart on Tuesday yesterday, which managed to continue its rise until it reached the target level at the resistance of 0.65400 before retreating again in the New York session.
The rise to that level is also seen to surpass the height reached at the end of October and last September, as well as record the latest 7-week high.
However, gloom returned to the Aussie dollar trading in the Asian session this Wednesday morning following the release of inflation data and dismal producer prices in China, which is Australia's main trading partner.
Thus, the price is seen hovering slowly around 0.65000 until trading resumes at the beginning of the European session, but the price is still above the support level of the Moving Average 50 (MA50) on the 1-hour time frame on the AUD/USD chart for a bullish signal.
If the price rally continues, the 0.65400 resistance will be tested again before the price breaks through it to record another recent high this week.
The target for a higher price increase is at the 0.67000 zone which was an important focus of trading last September.
However, if the Aussie dollar fails to maintain its previous bullish pattern, a bearish trend could occur with a break below the MA50 support triggering the expected trend reversal.
The price will be expected to drop towards the zone around 0.63700 before testing last week's low around 0.62800.
Then, the price is likely to continue its decline towards the important support zone which is at 0.62000.
