What has happened to the AUD/USD currency pair chart after the Australian central bank made a surprise appearance at its monetary policy meeting last week?
The Reserve Bank of Australia (RBA) increased interest rates by 25 basis points to 4.10% last week, when expectations were for rates to be kept unchanged.
The policy tightening measures seen to be continued by the RBA have the effect of increasing the value of the Australian dollar, following which the action will reduce the money supply in the economy.
Thus, it can be seen that the price on the AUD/USD chart displays an upward pattern until it continues to the opening of trading earlier this week.
The situation is also supported by the depreciation of the US dollar as investors remain cautious awaiting the results of the FOMC meeting that will take place this week.
The Federal Reserve (Fed) is expected to keep interest rates unchanged at 5.25%, but analysts do not rule out the Fed also making surprises like the RBA did.
Ahead of the FOMC meeting early Thursday morning, investors will first pay attention to the publication of United States (US) inflation data in the New York session tonight.
Once the results of the FOMC meeting are known, the focus will be on the Australian employment data report for an overview of the direction of the RBA's monetary policy setting.
The price on the AUD/USD chart as of Monday yesterday has reached a high in the 0.67700 zone until continuing today (Tuesday).
The price movement remains above the support of the Moving Average 50 (MA50) on the 1-hour time frame on the price chart and has not shown any signs of a trend change.
If the bullish pattern is still maintained, the price is seen to continue climbing to the 0.68200 level before reaching the target height at 0.69000.
Successfully breaking the highs reached in early May will help prices hit 4-month highs.
But be alert if the price starts to plunge below the MA50 support level to signal a bearish trend change.
The 0.67000 level is seen to be the closest support to be tested before the decline continues to the RBS (resistance become support) zone of 0.66400.
Next, the price continuing the decline lower could reach up to around 0.65500 to test the concentration zone.
