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AUDUSD Medium-term Trend Remains Downward

3/24/2023 11:37 AM

This week, the AUD/USD pair is holding at the support level of 0.6660 against the publication of the minutes of the meeting of the Reserve Bank of Australia (RBA) on March 21.

The document reflected the intentions of the regulator to continue tightening monetary policy to combat inflation, which currently stands at 7.8% YoY. Also, agency officials fear a further depreciation of the national currency, as interest rates in Australia are still lower than in some other countries.

The trading instrument is supported by the decision of the US Federal Reserve to raise interest rates by 25 basis points instead of 50 basis points, as analysts had previously expected, and the appearance of more “dovish” rhetoric, which is associated with the financial crisis that intensified after the bankruptcy of American companies, Silicon Valley Bank and Signature Bank. The negative trend has spread to the EU, where last week one of the two largest financial groups in Switzerland, Credit Suisse Group AG, announced that it was unable to fulfill its obligations to depositors. Against this background, investors are actively redirecting their capital from the US dollar to shelter assets, which traditionally hedge risks during a period of market uncertainty.

Today, analysts expect the publication of March data on business activity: according to forecasts, the index in the manufacturing sector will fall from 50.5 points to 50.4 points, and in the services sector – from 50.7 points to 50.5 points. In general, the indicators are strengthening, despite the serious pressure of inflation and the increase in the RBA interest rate. The implementation of calculations can support the positions of the national currency and contribute to its movement to the area of 0.6870.

The long-term trend is upward. After the correction in February and March, the price stopped at the support at 0.6570 and is now trying to grow, consolidating above 0.6660, if it holds, the positive dynamics will continue with the target at 0.6870, otherwise, a correction to 0.6570 may begin.

The medium-term trend remains downward. This week, the quotes tested the resistance of 0.6784–0.6764 and now may decline with the target around zone 3 (0.6557–0.6537), after the breakdown of which the asset will go to zone 4 (0.6357–0.6337).

Resistance levels: 0.6870, 0.7000, 0.7130. | Support levels: 0.6660, 0.6570, 0.6480.

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