Daily U.S. Session Watchlist: EUR/AUD

Euro and Australian catalysts lay ahead, making this consolidation in EUR/AUD probably one of the best setups to watch to start the new week.

Intermarket Snapshot

Fresh Market Headlines & Economic data:

• New York Fed ‘Empire’ business index posts record drop in June
• Trump ‘perfectly happy’ to slap further tariffs on China if no deal is reached, Wilbur Ross says
• Oil prices fall 1% as economic worries outweigh tanker tensions
• China central bank injects funds, second phase of RRR cut takes effect
• The price of newly-marketed U.K. property rises by an average of 0.3%
• Boris Johnson gets boost in race to become Britain’s new PM
• UK PM contender Javid says would back leave in any second EU referendum
• German economy to shrink slightly in second quarter – Bundesbank
• ECB’s Coeure: If we decide to cut rates, we’d have to consider tiering – FT
• ECB Officials Say Bank Ready to Act Amid ‘Alarming’ Market Signs
• Euro zone wages post record year-on-year rise in first quarter: Eurostat
• Foreign investors reduced their holdings of Canadian securities by $12.8 billion in April
• BOJ to stand pat even as trade war, dovish Fed cloud outlook
• New Zealand services index impvroves to 53.1 in May

Upcoming Potential Catalysts on the Forex Calendar:

• U.S. TIC Net Long-Term transactions at 9:00 pm GMT
• New Zealand Westpac consumer sentiment at 10:00 pm GMT
• Australia monetary policy meeting minutes at 2:30 am GMT (June 18)
• Australia house price index at 2:30 am GMT (June 18)
• ZEW Economic sentiment at 10:00 am GMT (June 18)
• Euro area trade balance & CPI at 10:00 am GMT (June 18)
• Canada manufacturing sales at 1:30 pm GMT (June 18)
• U.S. building permits & housing starts at 1:30 pm GMT (June 18)

What to Watch: EUR/AUD

EUR/AUD 1-Hour Forex Chart

EUR/AUD has been in a pretty solid uptrend since the beginning of April and recently made a strong move higher from 1.6100 to just about retest the 1.6400 ahead. But the pair has been in a tight 50 – 60 pip range over the last three sessions, setting up what could be a consolidation breakout play in the works.

And just ahead, we do have a few potential catalysts to help support a short-term momentum move:  the RBA meeting minutes and housing data from Australia, and a slew of data points ahead from Europe. None of the events are really top-tier market movers, but with a big surprise and the right combination of updates, it is possible to get EUR/AUD moving within its daily ATR of around 70 – 80 pips, and maybe even break out.

So for the bulls, ideally a retest of the support area around 1.6300 would give the best potential R:R and probability of success if the euro data is positive while Aussie data disappoints. But given today’s move is pretty strong, a break of the 1.6400 area should be considered if the data plays nice with price action.

For the bears, bad euro data or even more dovish commentary could bring in euro bears quickly, and if the market held 1.6400 strong after the Australian data, shorting there gives you a good potential R:R. And obviously, if we see a strong momentum move lower ahead of the European session, a break of 1.6300 on weak European data/ strong Aussie data (or even positive trade news) would likely draw in sellers and still give a potentially good R:R given that the next support area may not hit until the May/June support area around 1.6100.