Australian dollar weakness could have a sting in its tail suggest UniCredit who suggest a rally could be imminent

A look at the spot exchange rates shows:

The pound / Australian dollar exchange rate is 0.72 pct higher at 1.5182.

The euro / Australian dollar rate is 0.31 pct higher at 1.3116.

The Australian dollar / US dollar exchange rate is 0.74 pct in the red at 1.0313.

Please be aware that these are spot market rates - your bank will add their own discretionary spread to the rate. An independent FX provider will however guarantee to best your bank's offer, therefore delivering you more currency. Please find out more here.

Beware a sting in the tail: AUD could rally from here

The falls in the Australian dollar could continue, but of course markets never travel in a straight line.

Dr. Vasileios Gkionakis, the Global Head of FX Strategy at UniCredit Research has suggested we could actually be about to witness an Australian dollar rally:

"AUD-USD has traded weaker over the last couple of days on the back of a dovish RBA and poor economic data releases. However, we feel that the recent price action has been excessive as the aussie currently trades at approximately 2.5stds. below its monthly average.

"In the recent past, when the Australian dollar traded just below 2stds it managed to rally over the next ten days by an average of 1.8%.

"For this reason, we initiate a purely tactical long trade, with a target of 1.0550 and a stop loss of 1.0200."

Momentum suggests more downside to come

However, should momentum maintain its current path then 1.0300 should now provide decent support intraday for AUD/USD, but if it manages to make it below that level in the coming sessions, 1.0250 looks to be the next area to watch on the downside.

But, as Shaun Osborne at TD Securities says, "after some strong trends over the past few weeks in the FX markets, price action has been much more mixed and neutral so far this week, and overnight markets continued trading that way without many big developments to inspire much else."

 

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