Daily U.S. Session Watchlist: EUR/AUD

Checking out EUR/AUD today with risk sentiment swinging positive and the pair about to retest a recently strong area of interest.

Will it break or draw in buyers?

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD on bullish euro momentum, so be sure to check that out to see if there is still a potential play!

Intermarket Snapshot

Fresh Market Headlines & Economic Data:

• U.S. new home sales fall; January revised sharply up
• Flash U.S. Services Business Activity Index at 39.1 (49.4 in Feb); Flash U.S. Manufacturing PMI at 49.2 (50.7 in Feb)
• Richmond Fed Manufacturing Activity rose from −2 in February to 2 in March
• COVID-19 outbreak leads to largest collapse in European business activity ever recorded
• Record contraction in Germany’s service sector as impact of coronavirus outbreak hits domestic economy
• ECB Intends to Be Major Buyer in Commercial Player Market, Villeroy Says
• ECB purchases of exchange-traded funds can’t be ruled out: Kazimir
• Flash PMI signals record slump in U.K. business activity amid emergency public health measures to halt spread of coronavirus
• Bank of England says coronavirus tougher than banks’ stress test
• Oil jumps 3% towards $28 on Fed steps to support economy

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

• Canada Parliamentary vote on Coronavirus Aid at 4:00 pm GMT
• API Crude oil inventory change at 8:30 pm GMT
• Bank of Japan Monetary Policy meeting minutes at 11:50 pm GMT

What to Watch: EUR/AUD

EUR/AUD 1-Hour Forex Chart

With no major catalysts ahead and the likely passing of more stimulus from central governments (most notably the delayed $2T in stimulus in the U.S.), it makes sense to go with the current positive risk flow we’re seeing in the markets today. That makes the slow grind lower in EUR/AUD one to watch as the Aussie seems to be the big winner from today’s flip towards risk-on behavior.

From a price action standpoint, we can see on the one-hour chart above that the pair have seen selling pressure with every bounce higher over the last few sessions, but the 1.8100 major psychological level has been a tough one to crack. If the current risk-on behavior holds with no fresh catalysts to shift sentiment in either the euro or Aussie, then a break below/hold or break/momentum lower below 1.8100 is the time to put together a short-term short position.

And keep in mind that the daily ATR is around a huge 400 pips on this pair, which makes this interesting for both a day trading and swing trading opportunity from a potential return-on-risk point of view.

But if you’re a bull on the pair, either on a shift back to negative global risk sentiment, then watch out for a solid break above the falling ‘highs’ pattern before considering a long position. Even then, it’s still not a strong argument to be bullish, so look out for more negative coronavirus / global economic updates before raising your convictions on being long this pair.