The Australian Dollar is under pressure against the USD due to the market situation. On Tuesday afternoon, the Aussie is getting weaker mostly because investors are choosing “safe haven” assets, such as the USD and the Yen, in order to avoid risks.
At the time when everybody is running away from Chinese-American “trade wars” risks, it can be quite clearly seen that the demand for “safe haven” assets in significantly increasing. In this light, one may expect the Australian Dollar to continue trading downwards, at least until the balance of power on the market changes.
The Monetary Policy Meeting Minutes report published by Australia today says that the expensive national currency prevents the country’s economy and the Consumer Price Index from growing. Now, when the Australian Dollar is under pressure, the Australian GDP may boost a little bit. The report also says that the areas that require greater attention are still the labor market and the inflation. Expectations for the GDP growth are 3% while the inflation target remains at 2%.
A special focus in the RBA Minutes is put of “trade wars” risks. The regulator believes that the current tariff adjustment in world commerce implies many risks and may force the global economy to slow down. In the present context, such comments may be very essential, because the USA and China don’t seem to stop fighting without outside interference.
In general, the Australian Dollar would feel more stable and confident, if there weren’t so many emotions on the market right now.
Since the “market crowd” is usually driven by emotions instead of the common sense, one can see that the technical picture of AUDUSD is still showing the downtrend. If one takes a look at the previous correction to the upside, it can be seen that after breaking the support line, the pair has formed a new descending impulse and reached the projected support line. While forming the impulse to the downside, the instrument is moving towards the long-term fractal low at 0.7328. After breaking it, the price may test the support line of the long-term channel at 0.7275. This is exactly the area, which the price may rebound from.
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Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Disclaimer
Any forecasts contained herein are based on the authors’ particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.