Markets Risk Weakening Aussie Currency, But Why Is AUD/USD Rising?

thecekodok

 In the wake of risky market sentiment, high -yielding currencies including the Australian dollar will depreciate.


But why did the price on the price chart of the AUD/USD pair rise higher in early trading this week when the global market was hit by concerns of the contagion of the Covid-19 Delta variant?


The rise in prices on display was not driven by the strengthening of the Aussie dollar. The opposite happened due to the significant depreciation of the US dollar earlier in the week.


The depreciation factor of the US dollar is due to the fading investor confidence in the expectation for the Federal Reserve (Fed) to implement a reduction in bond purchases (tapering). A speech by Fed Chairman Jerome Powell at this weekend’s Jackson Hole rally will be in focus.


Last week, the price on the AUD/USD chart which made a decline until the end of the week has recorded the latest lows for the year.


However, the price has surged from the support zone around 0.71100 at the beginning of the week with the rise having recorded around 150 pips reaching the high level of 0.72700 as of Tuesday’s New York session yesterday.


The price movement is still in a bullish trend, however the price started to slow down in the Asian session on Wednesday morning down testing the Moving Average 50 (MA50) support level on the 1 hour time frame which will be an early indication of a trend change.



If the level manages to re -support the upside, the resistance level at 0.73000 will be the focus for testing.


Next, the continued higher rise on the bullish trend of the price will lead up to the focus level of 0.74000.


On the other hand, if the price starts to show a decline again, the 0.71000 support zone will be tested again after the price spike from that zone earlier this week.


A lower decline beyond the support zone will lead to the support zone of 0.70000 which was last tested in October 2020 trading.