Stock markets and interest rates were calm today, while the Japanese Nikkei 225 index rose significantly, approaching 30-year highs. Hopes for an additional stimulus when a new prime minister takes office boost prospects for increased cash flow to stock markets, boosting risk appetite among traders and investors.
RBA Governor Lowe said he predicted a significant contraction in Australian GDP during the quarter, eliminating any chance of an increase in interest rates before 2024. As a result, the Australian dollar lost ground. In a further statement, he said he expected a strong economic recovery once the imposition of restrictive measures was completed.
Traders and investors are waiting for consumer price data in the United States, watching for clues as to how and when the Fed will proceed with the long-awaited reduction in stimulus and tightening monetary policy. The risk to the markets is under consideration, as the reduction of cash flows to the stock markets and commodities will create appropriate conditions for a deeper adjustment with the strengthening of the USD, which after the prospects for Australia’s GDP will weigh further on the currency pair.
After the break of the upward microtrend, the price is directed for a support test at 0.73130, given the negative outlook for Australia’s GDP, this level will not withstand the pressure, as the price will test the support zone coinciding with 0.236 Fibonacci level between 0.72950 and the psychological level 0.7300. Alternatively, in the case of a rebound, the price will test the downward trend line, the resistance zone and 0.382 Fibonacci level, as well as the psychological level 0.7400.
Junior Trader Nikolay Petrov