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EUR/AUD – At A Critical Juncture
The EURAUD cross finds itself at a critical juncture. Technically the pair looks bullish as it forms a double bottom and cup and handle formation that could see breakout to the upside. But fundamentally the pair faces downside risk as the pair of central bank meeting scheduled for next week tilt the odds in favor of the Aussie.
Since last month the economic situation in Europe has deteriorated rapidly especially in Germany which has suffered the most from the Brexit fallout, as its export-driven economy has taken a hit. That is likely to keep the ECB on an accommodative path. The RBA on the other hand, is unlikely to cut rates further given the generally steady state of affairs in Asia Pacific. Therefore EURAUD will likely cap its move at the 1.5000 level and will drift back towards 1.4700 as the week progresses.