The downtrend continues in favor of the Australian dollar. The wave of optimism on the market, which has been observed since March, reflected on the value of the AUD as the main indicator of risk sentiment and the economic situation in China. At the same time, June was a difficult month for the AUD. At first, this currency was under pressure due to the deterioration of relations between China and the United States, due to the US blaming China for the coronavirus and the unrest in Hong Kong. This week, investors were seriously concerned about the beginning of a second wave of the pandemic, when the number of cases in China began to grow. This week's report on industrial production output in China was also disappointing.
The euro is strengthening against the Australian dollar, but remains weakened due to the economic situation. The economy is recovering with the easing of the quarantine, but recent reports remain disappointing. In particular, construction output in the EU fell by 28% in April, and inflation is too weak, although economic sentiment is improving.
In the near future, volatility will remain high. In Australia, data on the employment market will be published, and in the eurozone, the business activity index will be published. Both currencies will have an opportunity to strengthen. However, we believe that the price correction observed in June is coming to the end. The Australian dollar may strengthen after fears of a new wave of the pandemic subside. Most technical analysis tools, including the MACD and Stochastic oscillators, provide a clear signal to open the deals on the trend.
