CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Will EUR/AUD continue to break lower?

July 20, 2022 7:55 PM

When the ECB meets in less than 24 hours, it will decide between raising interest rates by 25bps or 50bps.  In addition, it will unveil a new bond buying vehicle which will take maturing proceeds of its bond holdings (from its prior bond buying programs) and reinvest them in peripheral country bonds in the Eurozone whose yields are climbing faster than those yields of the core Eurozone countries (i.e. Italy). (See our complete ECB preview here). But the key question for EUR/AUD is, “Will the ECB be more hawkish than the RBA?”  The RBA hiked rates 50bps for the second meeting in a row to bring rates to 1.35%.  The RBA minutes from the July 5th meeting said that “the level of interest rates was still very low for an economy with a tight labor market and facing a period of higher inflation”.  How much will the RBA hike at its next meeting on August 2nd? 

Everything you need to know about the ECB

EUR/AUD had been declining since February 4th, when the rate exchange rate was 1.6225.  The pair made an intraday low at 1.4320 on April 4th.  EUR/AUD then bounced in and ascending wedge pattern to the 50% retracement of the move and held under horizontal resistance at 1.5354 on July 1st.  Since then, the pair has been moving lower and on July 7th, broke below the bottom trendline of the wedge near 1.4970.  Today, EUR/AUD reached its lowest level since May 5th near 1.4750.  The target for the breakdown of an ascending wedge is a 100% retracement, or near 1.4320.

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 approaching support at the 61.8% Fibonacci retracement level from the lows of April 5th to the highs of July 1st, near 1.4726.  Below there, price can fall to horizonal support at 1.4600 and 1.4489, before dropping to the April 5th low at 1.4320.  However, if EUR/AUD bounces, first resistance is at the highs of July 11th at 1.4979.  Above there, price can move to a confluence of resistance at the upward sloping trendline of the ascending wedge and horizontal resistance near 1.5061, and then the highs of July 5th at 1.5245.

Source: Tradingview, Stone X

EUR/AUD has been moving lower out of an ascending wedge since July 7th.  Will it continue to move lower?   The next move may depend on how hawkish the ECB is at the upcoming interest rate decision meeting.

Learn more about forex trading opportunities.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024