By IFCMarkets

Reserve bank of Australia (RBA) said on its meeting on April 5 the further strengthening of national currency will not support the economy. Meanwhile, it left the base rate unchanged on the record low of 2% adding that low inflation gives a chance for the further monetary easing. Will the Australian dollar weaken?

According to the Fed funds futures, the chances for the single cut of the RBA rate in the forthcoming 12 months are estimated at 43%. The Australian regulator set target inflation at 2-3% while its current level is just 1.7% year on year. Last time the rate was cut in May 2015. The next inflation data for Q1 2016 will be released in Australia on April 27. The RBA meeting is due on May 3. This week the Australian dollar rate may be affected by the labour market data anticipated on April 14.

On the daily chart AUDUSD: D1 has left the uptrend to move sideways. The MACD and Parabolic indicators give bearish signals. RSI has left the overbought zone and has formed the negative divergence being below 50. The Bollinger bands are tilted down which means lower volatility. The bearish momentum may develop in case the Australian dollar falls below the last fractal low at 0,747. This level may serve the point of entry. The initial risk-limit may be placed above the last fractal high and Parabolic signal at 0.773. Having opened the pending order we shall move the stop to the next fractal high following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 0.773 without reaching the order at 0.747, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Market Analysis provided by IFCMarkets