- EUR/AUD tests an immediate barrier at the nine-day EMA at the 1.6308 level near the upper boundary of the descending channel.
- A bullish bias may emerge if the 14-day RSI rises above the 50 level.
- Major support appears at its three-week low of 1.6163.
The EUR/AUD cross gains ground for the third day in a row, trading near the 1.6300 mark during the Asian session on Thursday. On the daily chart, there are signs that momentum may be shifting from bearish to bullish as the cross attempts to break above the descending channel pattern.
The 14-day Relative Strength Index (RSI) remains just below the 50 level, indicating continued bearish momentum, although a reversal could be on the horizon. If the 14-day RSI rises above 50, it would signal the emergence of bullish sentiment.
To the upside, the EUR/AUD cross tests the immediate resistance at the nine-day EMA at the 1.6308 level, aligned with the upper boundary of the descending channel. A break above this channel could weaken the bearish bias and support the cross to navigate the region around its two-month high of 1.6600, recorded on November 1.
In terms of support, the EUR/AUD cross would find support at its three-week low of 1.6163, recorded on November 7. A break below this level could reinforce the bearish bias and lead the cross to approach the “pullback support” at the psychological level of 1.6000.
EUR/AUD: Daily Chart
The Euro FAQs
The Euro is the currency of the 19 countries of the European Union that belong to the eurozone. It is the second most traded currency in the world, behind the US dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of more than $2.2 trillion per day. EUR/USD is the most traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2 %).
The European Central Bank (ECB), headquartered in Frankfurt, Germany, is the reserve bank of the eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means controlling inflation or stimulating growth. Its main tool is the increase or decrease in interest rates. Relatively high interest rates (or the expectation of higher rates) tend to benefit the euro and vice versa. The Governing Council of the ECB makes decisions on monetary policy at meetings held eight times a year. Decisions are made by the directors of the Eurozone’s national banks and six permanent members, including ECB President Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), are an important econometric indicator for the euro. If inflation rises more than expected, especially if it exceeds the ECB’s 2% target, it forces the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to their counterparts tend to benefit the euro, making the region more attractive as a place for global investors to park their money.
The published data measures the health of the economy and may have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer confidence surveys can influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment, but it may encourage the ECB to raise interest rates, which will directly strengthen the euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest eurozone economies (Germany, France, Italy and Spain) are especially significant, as they represent 75% of the eurozone economy.
Another important data that is published about the Euro is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period. If a country produces highly in-demand export products, its currency will gain value simply from the additional demand created by foreign buyers seeking to purchase those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
