Source: PaxForex Premium Analytics Portal, Fundamental Insight
The German GfK Consumer Confidence Survey for May came in at -26.5. Economists predicted a figure of -16.0. Forex traders can compare this to the German GfK Consumer Confidence Survey for April, reported at -15.7. French Consumer Confidence for April is predicted at 92. Forex traders can compare this to French Consumer Confidence for March, reported at 91.
The Australian CPI for the first quarter increased 2.1% quarterly and 5.1% annualized. Economists predicted an expansion of 1.7% quarterly and 4.6% annualized. Forex traders can compare this to the Australian CPI for the fourth quarter, which rose 1.3% quarterly and 3.5% annualized. The RBA Trimmed Mean CPI for the first quarter increased 1.4% quarterly and 3.7% annualized. Economists predicted a rise of 1.2% quarterly and 3.7% annualized. Forex traders can compare this to the RBA Trimmed Mean CPI for the fourth quarter, which expanded 1.0% quarterly and 2.6% annualized. The RBA Weighted Median CPI for the first quarter rose 1.0% quarterly and 3.2% annualized. Economists predicted an increase of 1.1% quarterly and 3.3% annualized. Forex traders can compare this to the RBA Weighted Median CPI for the fourth quarter, which expanded 0.9% quarterly and 2.7% annualized.
Chinese Industrial Profits for February increased 12.2% annualized and 8.5% year-to-date, ending in March. Forex traders can compare this to Chinese Industrial Profits for January, which rose 4.2% annualized, and 5.0% year-to-date, ending in February.
Financial markets remain under pressure as economic data comes in weaker than expected, inflation surprises to the upside, consumer confidence falls, and corporate profit outlooks are overall weak. Manufacturing outperforms, but the services sector, which accounts for roughly 70% of GDP, continues to weaken. The Dallas Federal Services Revenues and the Texas Services Outlook readings offered the latest confirmation of weaker than expected results. The Euro had more upside potential versus the Australian Dollar and less downside risk, which should help the EUR/AUD drift higher with a rise in volatility.
The forecast for the EUR/AUD remains cautiously bullish after this currency pair paused its recovery from multi-month lows. After the ascending Tenkan-sen crossed above its flat Kijun-sen, bulls took control of price action. Adding to short-term volatility is the Ichimoku Kinko Hyo Cloud, as the Senkou Span A continues its downtrend while the Senkou Span B flatlined. The CCI spiked into extreme overbought territory and is likely to move below 100. Traders should monitor this technical indicator for the degree of its pullback. Should it remain above zero, a renewed push higher is expected. Can bulls maintain control over the EUR/AUD and force more upside into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the EUR/AUD remain inside the or breakout above the 1.4760 to 1.4885 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Short Position @ 1.4830
- Take Profit Zone: 1.5270 – 1.5395
- Stop Loss Level: 1.4685
Should price action for the EUR/AUD breakdown below 1.4760, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Long Position @ 1.4685
- Take Profit Zone: 1.4315 – 1.4485
- Stop Loss Level: 1.4760
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