EUR/AUD could trade above 1.6500!

The Eurozone CPI was finalized on Wednesday at 9.9% YoY for September, just a tick under double digits and the initial estimate of 10% YoY. However, recall that the August reading was only 9.1% YoY. The ECB meets next week, and consensus is that the central bank will raise by 75bps to bring rates to 1.25%. Recall that at the September meeting, the ECB surprised markets and raised by 75bps vs an expectation of only 50bps. The RBA meets on November 1^st. As with the ECB, the RBA also surprised the markets at its last meeting vs the expectation of 50bps. However, the RBA only hiked 25bps! Minutes released on Tuesday showed that the central bank still intends to hike rates due to rising inflation (which it expects to peak around 7.75%), however the size and the timing will be dependent on incoming data. The RBA’s Bullock also pointed out that the RBA meets more frequently than many of its peers, and therefore, it can achieve the same tightening with smaller individual rate increases. Fair point, however, markets are currently only expecting another increase of 25bps on November 1^st.

Everything you need to know about the ECB

EUR/AUD reached its lowest point since April 2017 on April 5^th, 2022 at 1.4320. The pair then bounced to 1.5398 on July 1^st, only to pull back and retest the lows on August 25^th. EUR/AUD reached a new low of 1.4283, but this proved to be a false breakdown and set the case for a double bottom with a neckline at 1.5398. The target for a double bottom is the height from the bottom to the neckline, added to the breakout point above the neckline. In this case the target is near 1.6550. After testing the lows, the pair immediately bounced and reached the neckline on October 4^th (the day of the last RBA meeting). On October 10^th, EUR/AUD broke aggressively above the neckline and is on its way to target. However, the pair ran into resistance near 1.5706, which is the 127.2% Fibonacci extension from the highs of July 1^st to the lows of August 25^th.

Source: Tradingview, Stone X

Trade EUR/AUD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

On a 240-minute timeframe, EUR/AUD is currently in a flag pattern with a target near 1.6050. If price can break above mentioned 127.2% Fibonacci extension near 1.5706, the next level of resistance is the 161.8% Fibonacci extension from the same timeframe near 1.6098 (see daily), then the highs from January 2022 at 1.6225. Above there, EUR/AUD can proceed to the target for the double bottom at 1.6550! However, if the resistance holds, first support is back at the previous highs near 1.5398. Below there, the pair can move to the 38.2% Fibonacci retracement level from the lows of August 25^th to the highs of October 17^th, near 1.5146, and then the 50% retracement level from the same timeframe near 1.4979.

Source: Tradingview, Stone X

EUR/AUD has been moving higher on the back of interest rate differentials. Will it continue if the ECB hikes 75bps next week and the RBA only hikes 25bps the week after? If so, the pair could be on its way to not only the flag target on the shorter-term timeframe, but also the double bottom target on the daily timeframe!

Learn more about forex trading opportunities.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.