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Short-term Trading Idea FX AUDNZD – Bear Play: After Correction Await Fall To 0.97

Trading opportunities on currency pair: after the RBA left its base rate at 2.25%, the AUD/NZD rate rebounded from the 1.0022 minimum. Expect a renewal of Aussie sales from the 1.0300-1.0365 zones with a subsequent drop to 0.97. Forget about this idea if growth exceeds 1.045.

Traders have been selling the Australian dollar in expectation of a reduction in interest rates. Since the RBA left the interest rate untouched at 2.25%, the pair didn’t reach an extra 22 points and parity.

The AUD/NZD rate closed the week at 1.0183. I don’t consider this a turnaround, but before the next time the RBA convenes the pair has time to sit in a sideways trend. Growth will be conservative since many economists expect a rate drop in May.

The economic situation for the Aussie’s strengthening is unfavorable. With this in mind, it’s possible the pair won’t make it to 1.0365. Due to the price of iron ore falling there’s a hole in the budget. State debt has grown to 28.5% of GDP. The amount of exports and tax income has decreased. The Australian company Atlas Lion intends to close all of its mines and cease exporting to Asia. The only way for other sectors of the economy to be stimulated is for the national currency to be weakened further.

New Zealand’s economy is significantly reliant on agricultural production. Their interest rates are 1.25% higher than those of Australia.

Weekly indicators are unfortunately showing sales for the Australian dollar. When the AO and CCI indicators are in such a state, there’s a likelihood that there’ll be a renewal around the trend line towards 1.0365. If there’s a general fall for the USD, the AUD/NZD could possibly snap to 1.040.

The Reserve Bank of Australia is due to convene on 5th May. At the end of April the AUD/NZD should already be falling. If the RBA lessens the rate, I’m waiting for a AUD/NZD fall to 0.97 by the beginning of July. If it doesn’t reduce it, then, more than likely, this scenario of a drop won’t come true.

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Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial markets. Alpari bears no responsibility whatsoever for any possible losses (or other forms of damage), whether direct or indirect, which may occur in case of using material published in the review.

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