EUR/AUD is retesting a falling ‘highs’ pattern ahead of what could be a couple of volatile sessions for the Australian dollar.
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Fresh Market Headlines & Economic data:
- German ZEW Investor Confidence Improves To 5-month High In FebruaryU.S. consumer prices unchanged in January
- Eurozone current-account surplus shrinks further
- UK employment hits another record high
- Labour rift proves it cannot be relied on, Hunt tells EU
- Kuroda Says Stronger Yen Could Force BOJ’s Hand on Stimulus
- The Swiss trade surplus narrowed to CHF 1.39 billion in Jan. from a marginally revised CHF 1.76 billion in the previous month
- Finally, the RBA is getting anxious about the housing downturn
- Global Dairy Trade price index rises +0.9% versus +6.7% on the previous read
Upcoming Potential Catalysts on the Forex Calendar:
- Westpac-MI Leading Index at 11:30 pm GMT
- Japan Trade Balance at 11:50 pm GMT
- Australia Wage Price Index at 12:30 am GMT (Feb. 20)
What to Watch: EUR/AUD
Forex Gump covered the upcoming Australia jobs event in his latest trading guide, basically saying that a slower pace of jobs growth is expected based on some clues from the latest AIG PMI data. If so, the current retest of the falling ‘highs’ on EUR/AUD could draw in buyers if it breaks, which the odds are probably better than even given the slight lean towards risk-off sentiment across the market today.
But before you bulls on EUR/AUD start wildly pressing the buy button ahead the wages data coming Wednesday or the man jobs event on Thursday, peep the minor area of interest around 1.5930 handle that was support, now broken and turned into resistance this month. This could be a roadblock to any gains, unless the Aussie jobs data significantly disappoints.
So, the setup to look out for today’s session is a slow grind higher to the next resistance area around 1.5930 as traders may price in the low expectations of Aussie data ahead of the event and/or today’s risk-off lean. From current levels, that’s a good 30 – 50 pips potential to the resistance area, which isn’t bad for an intraday haul. But of course, the bigger play is the one on the actual events, which is a break above 1.5930 and negative Australian employment or wage data for a potential long swing play.
For the bears, there is a swing setup with a potentially bigger payout, and that is if the Australia employment data surprises with a positive update and outlook. This is a low probability event given the expectations, but if it does occur, traders could quickly reverse any bearish Aussie positions, and EUR/AUD could easily break the short-term uptrend over the last session and possibly even Monday’s lows around the major psychological handle of 1.5800.