The Australian dollar has been under pressure since the start of 2021. The rally that was observed since March 2020 seems to have ended in the same year. However, we can still formally see an uptrend on the daily chart. Perhaps we are dealing with a simple consolidation in the rate, after which the trend will continue to move up.
Why did the consolidation start and what are the perspectives of restoring the trend in the near future? At the beginning of the year, with new macroeconomic reports from China, investors began to note a slowdown in the economy. In addition, relations between China and Australia have deteriorated, which may negatively affect Australia's export potential.
The USD, in turn, strengthened amid concerns about the global economic recovery. The reduction in unemployment in January by 0.4% and the growth in the number of open vacancies also contributed to this strengthening.
However, improvement in investor sentiment this week led to a renewed decline in the US currency. Investor sentiment improved in assessing the perspective for vaccination and the fight against the pandemic. Furthermore, the demand for commodity assets has increased again. The Australian dollar strengthened not only due to a good external background, but also due to macroeconomic reports. Investors are getting more and more signals of an improvement in the economic situation. In particular, in January, growth in the trade surplus was recorded due to the growth of exports to the highest level in nine months. The business confidence index also increased more than twice, and the capacity manufacturing rate reached 81%, which is the level of the pre-covid period; the volume of housing construction is also growing.
All this gives us a reason to expect a further strengthening of the AUD against the major currencies, and technical analysis indicators also indicate the effectiveness of the deals to BUY in the medium term.
