The risky market sentiment last week when the news of the spread of Covid-19 in China led to increased movement restriction orders is seen to add pressure to high-return currencies such as the Australian dollar and the New Zealand dollar.
However, why is the Australian dollar seen to be making strides with a relatively excellent performance last week?
This is due to the influence of the depreciation of the US dollar which is so significant in the market following the gloom of the United States (US) NFP employment report and further refined by the reading of the US inflation data which decreased.
This further reinforces expectations for the Federal Reserve (Fed) to slow interest rate hikes at the next FOMC meeting and gives the Aussie dollar an advantage to take advantage of the room to rise.
Still, Aussie investors will be alert this week to scrutinize the details of the minutes of Australia's central bank meeting on Tuesday before the focus turns to Thursday's Australian jobs report.
Examining the price movement on the chart of the AUD/USD currency pair, at the close of trading at the end of last week, the price had reached the 0.67000 height zone to record a 7-week high.
The zone was successfully reached after the surge started on Thursday when the release of US inflation data invited a negative reaction to the US dollar so that the price surged past the resistance at 0.65400.
Resuming trading at the opening of the week earlier, the price showed a slight decline in the Asian session, hovering below the 0.67000 zone but still above the Moving Average 50 (MA50) support level on the 1-hour time frame on the AUD/USD chart for a bullish signal.
Higher gains if it continues this week which passes the 0.67000 zone is seen to test the 0.67700 zone to reach the latest high level.
The continued bullish trend has the potential to push the price to reach around 0.69000.
However, if the 0.67000 zone becomes resistance for the price this week, a price drop can be expected again for the price to return to 0.65400 to test the RBS (resistance become support) zone.
A lower drop would signal a trend change before heading to the zone around 0.67300.
