Continuing last week's movement pattern, the US dollar is still trading weak after investors see increasingly convincing indications for the Federal Reserve (Fed) to slow monetary policy tightening.
After the United States (US) inflation data recorded a 6 month consecutive decline, policymakers began to look at the option of lower interest rate hikes of 25 to 50 basis points.
Therefore, the market reaction since last week has continued to see US dollar holdings released until expected ahead of the FOMC meeting in early February.
Other major currencies in the market will take advantage of this situation to record an increase in value again.
The Australian dollar also recorded gains against the US dollar for the past few weeks.
On the AUD/USD currency pair chart, the bullish pattern was still displayed until last week due to the significant depreciation of the US dollar.
After ending last week's trading below the 0.70000 level, the price that started trading early in the Asian session this morning continued to surge past that level with a drop back at the early opening of the European session.
The surge has hit a new 5-month high with expectations that price increases will continue.
Also showing a signal for a bullish trend is the price that is still moving above the support level of the Moving Average 50 (MA50) on the 1-hour time frame on the AUD/USD chart.
A higher increase if continued is seen to lead to around 0.71000 which will be the latest resistance zone for the price.
However, if there is a drop again, the price that fails to stay above the 0.70000 level is likely to drop back to the RBS (resistance become support) zone at 0.69000.
A lower break above that zone would be the latest signal that a price trend change is taking place.
