EUR/AUD looks like a potential mover very soon with lots of potential catalysts from Australia and China, as well as the latest PMI data from the Euro area. Will the current consolidation pattern turn into a breakout?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a potential resistance play on USD/CAD, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Fed Kaplan speech at 10:05 pm GMT
Australia Construction Index at 10:30 pm GMT
Australia Services PMI at 11:00 pm GMT
Japan Services PMI at 12:30 am GMT (Jun. 3)
Australia Retail Sales, Trade Balance at 1:30 am GMT (Jun. 3)
China Services PMI at 1:45 am GMT (Jun. 3)
Euro Area Services PMI at 8:00 am GMT (Jun. 3)
U.K. Services PMI at 8:30 am GMT (Jun. 3)
What to Watch: EUR/AUD
Despite top tier events this week from Australia, EUR/AUD hasn’t been able to break out of the tight range between 1.5725 – 1.5810. In fact, price action has tightened up more as the week rolls along, mainly gravitating towards the 1.5750 handle and forming a lower ‘highs’ pattern along the way.
This may be a signal that a downside break may come ahead, which may happen as soon as the upcoming Asia trading session as we’ll get a flurry of potential economic catalysts from Australia and China. The most notable to watch are Australian Retail sales and China Services PMI, and if those two come in better-than-expected/previous, the odds of a downside break in EUR/AUD rise.
We’ll mainly be on the look out for that scenario, and if the market does break below 1.5725, then that may draw in technical/momentum sellers to possibly push the pair lower in the short-term.
Of course, with the pair nearing the bottom of the range, disappointing numbers from Australia and China could turn the chart above into a range play scenario. In that situation, we’ll be watching out for bullish reversal patterns in EUR/AUD, and if the European services PMI data comes in better-than-expected, a possibility given the improvement in the covid situation in Europe, then we could see a move right back to the top of the range given the average daily true range of about 90 pips.