EUR/AUD – Double Top Breakdown

EUR/AUD – Double Top Breakdown

EUR/AUD – Double Top Breakdown

One of the worst performing currencies today was EUR/AUD. Between the decline in the euro and the surge in the Australian dollar, the pair dropped to its lowest level in 2 months. Australian economic data has been very good and the RBA appears unconcerned about the problems in the economy. In contrast, ECB officials have taken every opportunity to signal plans to ease monetary policy. While there are a few more pieces of Australian data scheduled for release this week, we believe that the “next move” for EUR/AUD will be driven by the euro and not the Australian dollar. Either way, EUR/AUD appears prime for a test of 1.4800 and likely a move to 1.4600. More easing by the ECB will only make Australia’s 2% yield more attractive.

Technically today’s move represents a clear break of the double top formation in EUR/AUD. The currency pair has fallen hard in the past 24 hours, breaking below the 200-day SMA. There is no support in the pair until 1.48 and if that is broken then 1.46. A move back above 1.5250 would be needed to negate the downtrend.

Chart Of The Day

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