The Australian dollar suffered a sharp decline in Asian session trading this morning (Wednesday) as some key economic data was published.
Australia's inflation report showed a fall in line with forecasts at 3.8% in June, opening the way for central banks to ease their monetary policy.
In addition, the data report of important sectors in China was also a contributing factor to the fall of the Aussie dollar due to China being Australia's main trading partner.
China's services PMI reading was still good but showed a decline, while the reading for the manufacturing sector contracted for the third month in a row.
Gloomy readings on the latest Australian and Chinese economic data saw the Aussie dollar fall to a 2-month low against the US dollar.
If you look at the chart of the AUD/USD currency pair, the price moved flat from last week until the beginning of this week around the 0.65600 to 0.65300 level.
But investors have started to be wary of early signals for bearish movement when the price moves below the Moving Average 50 (MA50) barrier line on the 1-hour time frame on the chart.
A significant decline was exhibited in the Asian session just now until the price crossed the 0.65000 level.
But prices started to slow down around the zone after recording the latest lows since early May.
A further drop in price if it continues is seen to reach around 0.64000 with the possibility of the US dollar being stronger against the Aussie dollar.
If otherwise, the price is able to bounce back up to pass the previous horizontal price movement zone at 0.65600-0.65300.
A further move higher will face some resistance such as at 0.66000 showing a trend reversal signal.
