Follow The AUD Reaction
Last week AUD/USD reached 1.8065, not seen since May, 2015. But the very same day it started to fall. Is it the start of bearish trend, or just a correction before another jump higher?
This week we have all the chances to understand the right direction. Till the last moment Australian dollar ignored any negative factors both from economy and the Reserve Bank of Australia. The inflation turned out to be weaker than expected, and the chairman of the central bank said there was no need to follow the peers in rate hiking. However, carry demand has kept supporting AUD/USD recently pushing it higher.
And this time the AUD reaction is what matters. If the RBA during the monetary meeting talks about negative effect from local currency appreciation and low inflation, and AUD won’t be sold, it means there is no change of direction in the nearest future.
However, we do believe AUD/USD will be sold with the nearest target at 0.7900 followed by 0.7840.