In the spotlight today, the outcome of a policy meeting by the Australian central bank has prompted a surge in the value of the Aussie dollar towards the end of the Asian session.
The Reserve Bank of Australia (RBA) remained on tapering until early September. Government bond purchases will be reduced from 5 billion a week until early September, to 4 billion a week in mid -September.
The move towards tightening this policy will theoretically increase the value of a country's currency as the level of money supply in the economy will begin to decline.
As a result, investors have reacted to the outcome of the meeting and witnessed a surge in the value of the Aussie dollar just now.
On the AUD/USD pair chart, the price which moved slowly around the 0.73600 level at the beginning of the Asian session this morning then surged up to the 0.74000 level and tested the resistance zone connected to the beginning of the European session.
The resistance zone was also tested in last weekend's trading but failed to get past it making it an important zone for investors to pay attention to.
Expectations for the US dollar to continue to move weak will also push prices to continue rising higher towards the end of the week.
If the price manages to continue the surge beyond the 0.74000 zone, the price will record the latest 3 -week high with the expectation to head to the 0.75000 high.
On the other hand if the zone still fails to be penetrated, the price may plunge back to lower levels.
For a bearish situation, investors will return to focus on the price support zone around 0.73300 or lower at the 0.73000 support.
