PrimeXBT News: After more than a week of entanglement, the AUD/USD support finally broke through at $0.74 and it looks set to head towards the next support at $0.73 soon. AUD/USD looks very weak and could drop further to retest $0.70 after re-emerging lockdowns due to a resurgence of COVID cases.

 

 

While the number of daily COVID cases in Australia has declined at the highest level over the weekend since September 2020, exposure areas in the state of Victoria have risen to 280, forcing AUD/USD prices to move south.

In addition to the virus woes, stronger data and COVID concerns, as well as indecision about the US Federal Reserve’s next moves, are weighing on AUD/USD prices due to the risk barometer situation.

The RBA is far from reversing the stimulus, as inflation hasn’t even met expectations of 1.1%, calculated annually against the 2-3% target, and indeed it may need to increase the stimulus if lockdowns start to slow economic activity further.

The RBA has signaled that it will continue its stimulus efforts until Australian inflation returns to the +2-3% target band, which is still a long way off. The need to continue easing will make the AUD one of the weakest G10 currencies this year.

Shorting the AUD against currencies with a clear policy divergence, especially the NZD, which has taken a decidedly tough stance, seems to be one of the easiest actions to take for the rest of this year, says PrimeXBT analyst Kim Chua.

About PrimeXBT market analyst Kim Chua

Kim Chua is a corporate trade specialist with a track record of success with leading banks including Deutsche Bank and China Merchants Bank. Later, Chua launched a hedge mutual fund that consistently generated triple-digit returns for seven years. Chua is also a core educator, developing her own proprietary business curriculum to pass on her knowledge to the next generation of analysts. Kim Chua has been an active follower of both the traditional and cryptocurrency markets and is keen to seize future investment and trading opportunities as two very different asset classes begin to converge.

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