Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Australian Current Account Balance for the second quarter came in at A$18.3B. Economists predicted a figure of A$20.8B. Forex traders can compare this to the Australian Current Account Balance for the first quarter, reported at A$7.5B. Australian Net Exports of GDP for the second quarter increased 1.7% quarterly. Economists predicted a rise of 0.9%. Forex traders can compare this to Australian Net Exports of GDP for the first quarter, which dropped 1.7% quarterly.
The Reserve Bank of Australia increased interest rates by 50 basis points to 2.35%. Economists predicted a rise of 50 basis points from 1.85%. Forex traders can compare this to the previous Reserve Bank of Australia interest rate decision, where it hiked rates by 50 basis points.
German Factory Orders for July are predicted to drop 0.5% monthly. Forex traders can compare this to German Factory Orders for June, which decreased by 0.4% monthly.
After the Euro dropped to fresh 20-year lows amid fears of worsening energy and cost of living crisis, price action reversed. This currency pair appears to form a bottom, as markets have priced in the worst-case scenario. A recession in the US will have ripple effects across Asia and negatively impact the Australian Dollar, a proxy currency for the Chinese Yuan. Eurozone data, despite its overall weakness, comes in mixed with several indicators beating estimates, confirming that traders became too pessimistic about the future outlook for the Euro. The risk for the EUR/AUD remains to the upside, and traders with a long-term outlook should consider current levels as a buying opportunity. The European Central Bank began draining liquidity from the Eurozone, which could act as a buffer and keep prices supported.
The forecast for the EUR/AUD remains cautiously bullish as this currency pair approaches its descending Ichimoku Kinko Hyo Cloud and has faced the majority of downside pressures. Price action attempts to hold on to its horizontal support area, and the flat Kijun-sen and Tenkan-sen confirm the lack of bearishness. Traders should pay attention to the CCI following its breakdown below 100 while maintaining its position above zero. A new push to the upside and into extreme overbought conditions could result in a higher high and suggest fresh multi-week highs from depressed prices. Can bulls extend their control over the EUR/AUD and pressure price action 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 1.4540 to 1.4685 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.4625
- Take Profit Zone: 1.5075 – 1.5155
- Stop Loss Level: 1.4475
Should price action for the EUR/AUD breakdown below 1.4540, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.4475
- Take Profit Zone: 1.4270 – 1.4375
- Stop Loss Level: 1.4540
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