The rates continue in the frames of the uptrend which has lasted for more than a year. During this time, the value of the Euro against the Australian dollar changed from 1.27 to 1.6, reaching a three-year high.
The Euro has long been supported by economic growth in the leading EU countries and the successful resolving of political problems. The Australian dollar does not have such support. In general, investors were disappointed in this currency: weak economic growth, together with a soft monetary policy has negatively affected the value of the AUD and has made this currency unattractive for investors. In addition, being a commodity currency, the AUD proved to be one of the most vulnerable currencies due to the trade war between the US and China. The commodity market is dominated by a negative mood; as a result, iron ore prices began to decline. Recent data about the Australian economy did not support the Australian currency: the employment rate rose by only 4.9 thousand jobs in March. Investors expected employment to increase by 20.3 thousand jobs. This reduces the probability of an increase of the rate in the near future.
On this background the Euro is strengthening, despite the fact that it is also under pressure because of the trade war. Business activity in Germany fell sharply due to fears of the conflict escalating. Thus, the probability of completion of the stimulus program for the economy in the near future is reduced, as well as the change of the rate next week by the ECB.
Next week market volatility will increase. The Australian dollar is likely to receive support through the release of data about the consumer price index for the first quarter of 2018, and will be able to strengthen slightly. In addition, on Thursday an ECB meeting will be held, at which there will be announced a decision about the rate. It's likely to be left unchanged amid global risks and slowing economic growth. Such a decision is expected on the market, but will allow the Australian dollar to consolidate against the Euro. At the moment the most optimal would be the deals on the trend - to buy, which can be effective in the short and long term. Next week it will be possible to open also the short deals with a possibility to get the profit on the price correction.
