Australia’s low rate of inflation in Q1 2012 may become another factor speaking in favor of interest rate cuts during the forthcoming RBA meeting scheduled for early May. The current inflation target is 2-3%. According to Steven Walters, Chief Economist at JP Morgan, a 0.25% cut is almost inevitable. If the eurozone crisis escalates, the probability of further interest rate cuts will increase.
Interest rate cuts may have a positive impact on Australia’s labor market. Despite fact that the rate of unemployment has remained around 5.25% over the last 6 months, some experts have been worried ever since the working week in Australia was cut.
Fundamentally, there are many factors indicating the future weakness of the Australian Dollar. Technically, it is necessary to pay attention to a 2.98% decline in the 3-year Australian bond yield. The analysts at Barclays Capital assume that UADUSD will decline down to 1.0155 - 1. 0135 once the yield falls below the current level.
According to , AUDUSD keeps recovering against the major downtrend. A break below 1.0225 will resume the downtrend. The closest major level of support is 1.0120. The major bearish trend will be completed as soon as the price consolidates above 1.0417 (ash shown below):
