EUR/AUD is retesting a resistance area that has been a tough nut to crack for the bulls in April. Will the upcoming top tier data be the hammer needed for the buyers?
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Fresh Market Headlines & Economic data:
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- U.S. New-Home Sales Climb for a Third Straight Month in March
- Canadian wholesale sales increased 0.3% to $63.7 billion in February, the third consecutive monthly gain
- Trump vows to ‘reciprocate’ against EU tariffs after Harley reports 26.7% drop in profit
- FHFA House Price Index Up 0.3 Percent in February; Up 4.9 Percent from Last Year
- China central bank likely to pause reserve cuts, but policy easing on track: sources
- Brexit: Cross-party talks to resume
- ECB’s Coeure sees no argument for tiered deposit rate: FAZ
- BOJ signals readiness to combine steps if more stimulus needed
- Bank of Japan core CPI at 0.5% vs. 0.4% previous
Upcoming Potential Catalysts on the Forex Calendar:
- Australia quarterly CPI at 2:30 am GMT (Apr. 24)
- Japan leading indicators index at 5:00 am GMT (Apr.24)
- German IFO business survey at 9:00 am GMT (Apr.24)
- Bank of Canada monetary policy statement at 3:00 pm GMT (Apr.24)
What to Watch: EUR/AUD
For today’s watchlist, we’re checking out EUR/AUD as it retests a major resistance area between 1.5825 – 1.5850. It’s held of the buyers all through out April, sending them back roughly four times before just this month, and by the looks of today’s price action, could be sending them down once again this week.
But we do have a top tier catalyst on the way for the Aussie dollar in the form of the quarterly Australian CPI update, and the euro has upcoming German IFO business survey data as well. These can be short-term sentiment shifters for EUR/AUD, especially the Australia CPI number since it could heavily influence the thinking over at the Reserve Bank of Australia if it’s way off of expectations.
Right now, that resistance area is one to watch and if we see a positive surprise from Australia CPI, then the odds are good that traders will likely that bearish AUD move that’s come over the last couple of sessions. The recent support area around the 1.5700 handle is a reachable target given the daily ATR of around 90 – 100 pips, making a sell from 1.5825 – 1.5850 a good potential R:R with a tight stop above this area.
For bulls, if we get a very weak Australian CPI number and surprise positive German IFO data, a break above 1.5850 should be up for consideration as the path for a move higher seems pretty clear up to the 1.5900 – 1.5925 area (previous broken support area from March). It’s not the best potential reward scenario unless we see a pretty weak number from Australia, so it’s probably a good idea to not get too greedy unless ALL of the stars line up on this one, including global risk-off sentiment.