Buy 1.0880 for 1.1200 with a stop 1.0710. Estimated time duration 3 months.
After touching a low of 0.9898 on 19 March 2020, price has climbed to a high of 1.1041 on 18 August 2020. There was a pullback in price and price declined to 1.0813 on 4 September 2020. We think the correction has likely ended at this location and we have seen a price rally to 1.0917. We think the rally has room to move higher and we see price going higher to 1.1200 by the end of the year 2020.
Stochastic just had a bullish crossover near the oversold zone and is moving higher. There is lots of room for Stochastic to move higher. MACD has yet to have a bullish crossover but we could see one soon if price continues to move higher and do not decline. A bullish MACD crossover is likely to be a strong hint of a price rally ahead.
As a result of the coronavirus pandemic, tourism around the world has been curtailed. Both Australia and New Zealand are affected, but New Zealand has a bigger exposure to tourism than Australia. As a result, New Zealand economy is more adversely affected than that of Australia. Besides the much lower tourism business loss, job losses is also higher for New Zealand as jobs in the tourism sector were cut due to lower tourists arrivals.
Australia has a stronger external balance. Australia is a bigger producer of raw materials and its biggest buyer is China. China was the first to country with the coronavirus but China is also among the first countries to emerge from this pandemic. As a result the Chinese economy is recovering faster than other coronavirus inflected countries. There will be a higher demand of raw material from China and Australia is in a better position to benefit from demand stimulus given by the Chinese government to help its economy recover.
Compared to New Zealand, Australia is in a stronger position for recovery in economic growth.