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  4. AUDUSD may drop further due to inflation forecast

AUDUSD may drop further due to inflation forecast

May 09, 2016 09:13

The AUDUSD dropped heavily after unexpected rate cut. The problem is that Australia is already addicted to debt and even more debt could turn Australia into Japan which is full of debt. Additionally the statement suggested the inflation between 1-2 % in 2016 followed with 1.5-2.5 % through mid 2018. Moreover, as the inflation problem was not enough, the RBA also expressed its worries about the strong AUD (!) that definitely hurts the exports.

Another rate cut in August is possible and sell the rallies is the option.

The POC comes at 0.7392-0.7402 (DPP, Equidistant channel top, H3) and slightly above within 0.7420-35 we have another strong POC2 (H4,EMA89) and we could see another rejection on pullbacks towards POCs. Another important level to watch for is 0.7285 (X cross breakout) as momentum break or H4 close below will target 0.7220.

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