EUR/AUD – Headed for 1.60? (Click on Chart to Zoom In)

EUR/AUD – Headed for 1.60? (Click on Chart to Zoom In)

EUR/AUD – Headed for 1.60? (Click on Chart to Zoom In)


The best performing currency pair today was EUR/AUD. Thanks to better than expected Eurozone flash PMIs and weaker than expected Chinese data, the pair rose to its strongest level since February 2010. The 2% breakout is one of the biggest moves that we have seen in EUR/AUD in months. There is nothing more important for a currency pair’s outlook than economic divergence and in the case of EUR/AUD the gap is growing between the Eurozone and Australia. Manufacturing activity in China, Australia’s largest trading partner contracted for the first time since August while manufacturing activity in the Eurozone grew at its fastest pace since May 2011. This trend is expected to continue with Australia feeling the pain of slower Chinese growth and Europe benefitting from low expectations. Fundamentally, EUR/AUD should head higher with 1.60 being a reasonable medium term target.


Technically, we have to turn to the monthly chart to find resistance in EUR/AUD. 1.56 was an important breakout point for the currency pair. It is now the first level of support and below that, the level to watch is 1.55. As for resistance, 1.60 is the next key level. Not only is it a psychologically significant round number, but it is also the point at which the sell-off stalled in February 2010. The next level above that would be the 50% Fibonacci retracement of the 2008 to 2012 sell-off at 1.6390.

Chart Of The Day

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