AUDUSD Forecast: The Bearish Pressure Is Still On The Table
The latest update states that the Australian state of New South Wales has reported the largest daily increase in new cases so far for 2021, with the Sydney lock being fully extended until July 16. Extending the lockdown may adversely affect AUDUSD. The pair currently found support at 0.74000, making current gains with a weak dollar. So we can expect a slight increase on re-testing the zone around 0.75000. At the bottom, we have a growing trend line that is backing up for now, and the first hurdle for us is the potential bearish trend. To continue the longer-term bullish trend, we need a break above the upper resistance line and the zone around 0.76000.
A further period of strong employment growth will be needed to reduce the unemployment rate sustainably to a low 4, and Love told the Australian Economic Society via a webinar on Thursday. Unemployment will also have to fall further.
Citing the link between income growth and unemployment, Love said stronger labor markets generate stronger wage increases – supply and demand laws still work. And second, the link appears to be stronger at unemployment rates below 5 percent, Love said.
The central bank’s strategy is to reduce the unemployment rate to accelerate wage growth and return inflation to the target range in a sustainable way.
The RBA expects that by 2024, inflation will need to be kept within the target range of 2 to 3 percent.
The governor reiterated that increasing the cash rate depends on the data, not on the date; it is based on inflation outcomes, not on the calendar.
The recent decision of the central bank to reduce the purchase of bonds from 5 billion to 4 billion US dollars per week does not represent a withdrawal of support from the RBA, Love added.
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