Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/USD as it may pull back from an uptrend, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
FOMC Meeting Minutes at 7:00 pm GMT
Japan Average Cash Earnings at 11:30 pm GMT
Australia Trade Balance, Building Permits at 12:30 am (Jan. 7)
What to Watch: EUR/AUD
It’s likely the surge in virus cases across Europe and the resulting lockdowns have soured traders on the euro, while the Aussie has likely benefitted from Australia’s relative success in its containment of the pandemic.
And we saw another round of euro selling on the session, likely sparked by the net disappointing round of service PMI updates from the eurozone, which may influence euro sentiment in the short-term along with extended lockdowns in Europe.
So, if you’re bearish on EUR/AUD, the odds are in your favor, and with the break of the previous swing low at 1.5830 now holding, it may be time to consider a fresh short or adding to your shorts if you’re already in the pair and expect positive Australian updates.
If you’re bullish on EUR/AUD, possibly on expectations of weak Australian updates and/or a shift in broad risk sentiment towards negative, then a break-and-hold above that 1.5830 minor area of interest is the price action to watch out for.
This is a low probability setup at the moment, so be careful if you are considering this play, but the potential reward is pretty strong if we see a round of global risk aversion price action.