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The upcoming monetary policy statement from the European Central bank is next up as a potential forex catalyst, making the consolidation in EUR/AUD one to watch for short-term opportunities.

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at AUD/CAD ahead of the Bank of Canada monetary policy statement, so be sure to check that out to see if there is still a potential play!

Intermarket Update:

Equity Markets Bond Yields Commodities & Crypto
DAX: 15610.28 -1.47%
FTSE: 7095.53 -0.75%
S&P 500: 4514.07 -0.13%
NASDAQ: 15286.64 -0.57%
US 10-YR: 1.338% -0.033
Bund 10-YR: -0.328% -0.006
UK 10-YR: 0.751% +0.006
JPN 10-YR: 0.049% +0.015
Oil: 69.33 +1.42%
Gold: 1,790.50 -0.43%
Bitcoin: $46,753.00 -9.58%
Ethereum: $3,417.90 -13.39%

Fresh Market Headlines & Economic Data:

Dow falls for a third day as investors grow cautious in September

Bank of Canada maintains bond buying, sees second-half rebound

Businesses are feeling stronger inflation and paying higher wages, Fed’s ‘Beige Book’ says

NY Fed’s Williams says it may be appropriate to start tapering asset purchases this year

SEC threatens to sue Coinbase over crypto lending programme

U.S. Job openings rose to yet another record high in July

U.S. mortgage application volumes at lowest since mid-July -MBA

Canadian economic activity expanded for seventh straight month in August: Ivey PMI

BoE split evenly in August on whether basic conditions for rate hike met – Bailey

Upcoming Potential Catalysts on the Economic Calendar

API Crude Oil inventory change at 8:30 pm GMT
New Zealand Manufacturing Sales at 10:45 pm GMT
Japan M2 Money Supply at 11:50 pm GMT
China Inflation Rate at 1:30 am GMT (Sept. 9)
German Trade Balance at 6:00 am GMT (Sept. 9)
Japan Machine Tool Orders at 6:00 am GMT (Sept. 9)
RBA Debelle speech at 8:35 am GMT (Sept. 9)
European Central Bank Rate Decision at 11:45 am GMT (Sept. 9)

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: EUR/AUD

EUR/AUD 1-Hour Forex Chart
EUR/AUD 1-Hour Forex Chart

On the one hour chart of EUR/AUD above, we can see the market going into consolidation mode after a short bounce from the 1.5950 minor psychological area. This is the type of behavior that sets up perfectly for those looking to play an explosion in volatility and possibly a strong momentum move, a scenario that may be sparked by the upcoming monetary policy statement from the European Central Bank.

Expectations are for no changes to interest rates or the ECB’s bond purchasing programs, so traders will likely be watching growth/inflation forecasts and plans for quantitative easing in 2022 for directional cues.

Again, the tight consolidation pattern sets up for a “news straddle” strategy, where the trader does not have a bias and looking to catch momentum on a range break.

For those who are looking at the overall trends, the obvious technical swing/position setup is to look for an opportunity to sell EUR/AUD given the trend lower. And if the market does pop higher on the event, traders  may look to the broken support area around 1.6100 – 1.6125 for bearish reversal patterns before hopping in.

If the market breaks below the current consolidation area around 1.6050, then a sustained break below 1.6000 could draw in technical sellers, looking to target the previous swing low around 1.5950 for short-term gains. That area is a strong one to watch as well to potentially adjust a longer-term short position, either to roll down stops and/or add to the position to reduce risk and maximize potential gains.