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EUR/AUD Eyes Crucial Resistance

Published 12/01/2021, 01:33 AM
Updated 07/09/2023, 06:32 AM

On Tuesday, the euro kept soaring against AUD as risk aversion took over the financial markets to the detriment of commodity currencies like the Australian dollar. The EUR/AUD pair broke higher and peaked at 1.59680 amid hot EU inflation data.

Hot Inflation Data Boosts Euro

The United States 10-Year Treasury note yield fell to 1.419% on Tuesday, the lowest level in more than a month due to increasing demand for government bonds. Furthermore, EU inflation rocketed to a record high of 4.9% YoY in November. The core reading for September came in at 2.6%, much higher than the previous reading of 2%, exerting pressure on the European Central Bank to put tapering on the horizon sooner than later.

EUR/AUD - Technical View

The EUR/AUD is trading in a triangle pattern on the daily chart. The pair formed higher lows and higher highs after climbing from an 8-month low of around 1.5350. A bullish scenario seems most likely in the medium term as buyers finally broke through the 200-day EMA on Friday and tested it again on Monday.

The pair continues to rise, exceeding last week's highs. Suppose buyers manage to close the price above the 1.5910-hurdle that initiates the journey towards the 1.6042-barrier. If the price increases beyond this critical level, buyers may jump to 1.6170 near the upper line of the triangle and the two-month peak.

In contrast, sellers may follow up by testing 1.5745 as immediate support if the positive movement waned. If this hurdle is decisively penetrated, sellers may be encouraged to lower prices further toward the 1.5448 support level at the previous bottom.

In line with the general upward trend in the pair, both the RSI and momentum oscillators are pointing north. Over the past two days, the RSI has gained ground back above its 50-level, while the MACD has been able to climb back above the zero-line.

EUR/AUD daily chart.

Events of the day

The third quarter's economic growth data for Australia was released later in the Asian session. The economy contracted by 1.9% after growing by 0.7% in the second quarter. A shrinking economy may increase AUD's bearish bias and support the EUR/AUD pair to advance.

{{yt-eZ9xtdlj_tw|Daily Technical Analysis | EUR/AUD bulls hold the ground above 200-day EMA | 30.11.2021}}

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