The AUD weakens even in the confrontation with such a weak currency as the euro. The rates are approaching absolute highs and with a high probability they will be tested this year. As a rule, the deals to SELL usually cost to be opened at the highs, but not everything is so clear this time and the rates can be a bit higher.
This week, the trade deficit grew from 8.8 to 30.6 billion euros in January shockingly, putting pressure on the euro. Nevertheless, the situation for this currency remained positive, as the ZEW economic sentiment index remained in the green zone for the third month in a row, at +10 points in March. Investors also appreciated the stabilization of the situation in the banking sector, as Credit Suisse is rescued by merging with UBS; other banks receive the necessary liquidity. The ECB remains aggressive in raising rates despite all the risks for the banking system.
Next week, news from the eurozone will remain the driver. The focus will be on inflation report in March, which is expected to decline. The unemployment rate will also be known. The decline in inflation will signal a reduction in the need to increase the rate, which is already putting pressure on the EU economy. Perhaps the ECB will once again raise the rate, given that it is less than in the US, but in the future, the euro will need new incentives to strengthen.
Technical analysis indicators unanimously show a buy signal. We believe that such deals will remain effective for a limited period of time. The rates will grow a little more, but then we are waiting for at least a price correction.
