The uptrend continues and the Australian dollar is under increasing pressure due to a decrease in the demand for risky assets, falling iron ore prices, very difficult relations with China, and, of course, Covid-19, which has pushed Australia back into a lockdown. Investors are gradually refusing the risk due to the fall of the Chinese stock market, considering the actions of the Chinese government and the bankruptcy of the largest development company Evergrande. Also, the AUD was under pressure this week, following the results of the publication of minutes from the last RBA meeting, as investors did not see in them any hints about the bank raising interest rates in the foreseeable future.
Also, this week the energy crisis in the EU remains in the spotlight. Energy prices have risen sharply in Europe, in particular for gas. This has put pressure on those manufacturers dependent on gas and/or oil prices. According to the forecasts, the EU economy can face a recession at the end of the year. Also, the focus is on the elections in Germany, which will be held this Sunday. Investors are waiting for the results, although the opposition is not expected to win.
Under the influence of the situation in the EU, inflation has sharply increased because manufacturers who depend on resource prices have begun to raise their prices. The producer price index in Germany has already increased by 12.4% in August, and inflation in the EU as a whole was 3%, which is the highest level for 10 years, and exceeds the ECB's target level.
Despite the many risks for the euro, in the confrontation with the Australian dollar, there are excellent chances for it to continue growing. Most technical analysis tools also indicate the effectiveness of the deals to BUY in the medium term, although the Stochastic oscillator has reached the overbought zone. Nevertheless, our choice today are the deals to buy.
