The Australian dollar has been heavily sold over recent months and the latest COT report still shows that traders have record short positions at -80K+. However, the last RBA meeting showed a board struggling with reasons to keep the AUD weak. The desire for inflation to be sustainable looked almost like the RBA want to wait for inflation to rise and only act after the fact. With the RBA projection of inflation to be at 2.75% in 2023 that means the RBA project the inflation level to be in their target range for 2 years! So, this means that the market will question their holding stance. With the next wage-price Index print not until May18, the RBA has bought themselves time here. The positive PMI prints from China this week should also support AUD prices from a medium-term perspective.
AUDUSD is heading towards a period of seasonal strength now from March 01 through to April 30. Over the last 19 years, AUDUSD has gained in 12 of those years between March 01 & April 30. The average return is 1.72%, the maximum gain 15.18% in 2009 and the maximum loss has been-6.56% in 2004.
Major Trade Risks: The main risk here is that risk-off trading on geopolitical concerns over the Russian/Ukraine crisis results in bids into the USD and sellers for the AUD. This would mean AUDUSD downside.