The Asian session this morning (Wednesday) saw a surge in the value of the Australian dollar following the market's reaction to the published inflation data.
At 8.30am local time, Australia's consumer price index (CPI) data was published with annual inflation readings rising to 5.6% for September from 5.2% the previous month, beating forecasts of 5.3%.
This rise in inflation is likely to prompt central banks to shift towards tightening their monetary policy and make the Aussie dollar stronger.
The Reserve Bank of Australia (RBA) has kept interest rates unchanged at its latest policy meeting with expectations that current policy will be maintained.
The price chart of the AUD/USD currency pair on Wednesday yesterday was seen to continue the increase at the beginning of the week reaching a high level of around 0.63800 before retreating back down to around 0.634500.
Investors are still seeing price movement signals on a bullish trend where prices remain above the Moving Average 50 (MA50) support level on the 1-hour time frame on the AUD/USD chart.
At the beginning of the Asian session this morning, investors saw the surge continue to exceed the height reached yesterday after the Australian CPI data was published.
The surge hit a recent high of 0.64000 before the price retreated back down to around 0.63700 resuming early European session trading.
If the move higher continues, the price is seen to head towards the resistance zone at 0.64400 which was challenged on October 11th.
If the breakout is higher than that, the target for the next bullish move is at the 0.65000 level.
However, if the price shows a decline again, the MA50 support level will be tested and if it is broken, it will signal a change in the bearish trend for the price.
The decline is seen to return to the important support zone at 0.63000 which has been tested several times in recent weeks.
