EUR/AUD may be set to break out of recent consolidation for a swing move ahead with potential catalysts coming from both Australia and Europe this week.
EUR/AUD Consolidation Break?
EUR/AUD has kind of been a sleepy market over the past few weeks, slowly dancing around the 1.5600 major psychological level basically since February 2021.
But we did just see the pair maintain higher levels in the past week, likely on the recent surge in risk aversion behavior as inflation fears and rising interest rate speculation has taken over the financial markets.
This week, that sleepy behavior may give way to some real volatility as we’ll get the latest employment update from Australia and the latest business sentiment updates from Europe. Expectations are for the Australian jobs report may show weakness in April vs. March, while Europe is likely to show waning optimism among the different business sectors.
If both of these scenarios played out, that would likely mean more sideways action with a brief burst of volatility this week.
But if we see a surprise read from either or both economic events, there may be a case for short-term momentum to pick up one way or another on EUR/AUD.
And with the overall trend leaning higher in May, an upside break on surprising positive European PMI data and/or weak Aussie jobs data may draw in technical bulls on a consolidation breakout signal.
Of course, if we see the opposite surprise trades (i.e., weak European PMI update and/or strong Aussie jobs numbers), 1.5700 may likely hold as resistance and traders could take the pair back to the bottom of the current range around 1.5600.
What do you all think? Will this week’s data come inline with expectations and keep the rangebound behavior going? Or will we be shocked by the data and see EUR/AUD breakout? Let me know in the comments section below!
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