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With a relatively quiet economic calendar ahead and the U.S. on holiday tomorrow, trends may continue to run further in the short-term. And this strong recent move in EUR/AUD should be one to watch with the lone potential top tier catalyst coming from Australia soon.

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 12613.72 +0.69%
FTSE: 7603.53 +0.59%
S&P 500: 2981.42 +0.28%
DJIA: 26844.36 +0.22%
US 10-yr 1.955% -0.022
Bund 10-YR -0.385% -0.02
UK 10-YR: 0.696% -0.027
JPN 10-YR: -0.164% -0.024
Oil: 58.20 +0.52%
Gold: 1437.50 +1.36%
Bitcoin: 11230.00 +4.73%
Etherium: 291.98 +0.51%

Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Australian Retail sales at 2:30 am GMT (July 4)
  • Switzerland CPI at 7:30 am GMT (July 4)
  • ECB’s Lane speaks in Frankfurt at 8:00 am GMT (July 4)
  • Europe Retail sales at 10:00 am GMT (July 4)

What to Watch: EUR/AUD

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

EUR/AUD has been on a tear lower over the past week, thanks to improving trade war rhetoric between the U.S.-China and likely on the idea we’ll see more stimulative actions from central banks in the near future. Meanwhile the euro takes continues to see pressure as economic data continues to disappoint, strengthening the argument for the ECB to cut interest rates once again later this year.

This brings EUR/AUD to a major support area just above the minor psychological level of 1.06050, which looks to be flimsy at the moment and ready to break. The upcoming Australian retail sales data is likely to bring volatility once again to the pair, and if that brings in more Aussie sellers, look for technical traders to likely hop in given the lack of top tier events from both the Euro area and Australia for the rest of the week.

With a daily ATR of around 85 pips, the next major psychological level of 1.6000 should be easily reached in the next session or two if the major driving themes remain unchanged, so the potential short-term  return-on-risk isn’t that exciting at the moment. But given that the pair is in a strong momentum move lower, it makes sense to see if 1.6000 breaks for an even bigger move lower.

For the bulls, it’s possible we’ll get support at current levels, arguably on profit taking after such a strong move lower, and if Australian retail sales disappoints to strengthen the case for an RBA rate cut (a move that doesn’t seem likely for now after the last RBA meeting). Look for this area to hold and for bullish reversal candles through out the rest of the U.S. session, and if we see the combo scenario of weak Aussie retail sales and better-than-expected European retail sales, a daily ATR move is not out of the question to retest the minor resistance area around 1.6150 that traders saw at the end of May in the next few sessions.