Today’s ZEW Survey is expected to move the Euro. Economists expect a worsening in the current situation sub-component, but an improvement in the economic expectations sub-component. The Eurozone economic expectations sub-component is also anticipated to show an improvement, but all three are set to remain deep in negative territory. How will forex traders react to this economic data point? Bullishness has increased in the Euro after Mario Draghi’s press conference, but is this just a small bounce in a bigger down-trend or can the EURAUD enter a rally? Today’s fundamental analysis will take a look at the upside potential and weight the downside risk.
Australian data released during the Asian morning trading session showed a decrease in consumer confidence, but house prices fell less than expected in the second-quarter. Minutes released from the latest RBA meeting were in focus which kept an October interest rates cut on the table, the markets have priced in a 25 basis interest rate cut for November as well as January. Will this pressure the Australian Dollar further to the downside and advance the EURAUD from current levels above its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis now and grow your balance trade-by-trade!
Here is the key factor to keep in mind today for Euro trades:
- German ZEW Survey and Eurozone ZEW Survey: The German ZEW Survey Current Situation Index for September is predicted at -15.0 and the German ZEW Survey Economic Expectations Index at -38.0. Forex traders can compare this to the German ZEW Survey Current Situation Index for August which was reported at -13.5 and to the German ZEW Survey Economic Expectations Index which was reported at -44.1. The Eurozone ZEW Survey Economic Sentiment Index for September is predicted at -37.4. Forex traders can compare this to the Eurozone ZEW Survey Economic Sentiment Index for August which was reported at -43.6.
Here are the key factors to keep in mind today for Australian Dollar trades:
- Australian ANZ Roy Morgan Weekly Consumer Confidence Index: The Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of September 15th was reported at 109.3. Forex traders can compare this to the Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of September 8th which was reported at 113.3.
- Australian House Price Index: The Australian House Price Index for the second-quarter decreased by 0.7% quarterly and by 7.4% annualized. Economists predicted a decrease of 1.0% quarterly and of 7.7% annualized. Forex traders can compare this to the Australian House Price Index for the first-quarter which decreased by 3.0% quarterly and by 7.4% annualized.
- RBA Minutes: RBA minutes suggested that further interest rate cuts could be enacted in order to support growth as well as inflation targets. The RBA is currently expected to cut interest rates by 25 basis points in November, but an October cut remains on the table and dependent on economic data. The RBA kept its interest rate unchanged at 1.00% at its September meeting.
- Chinese New Home Prices: Chinese New Home Prices for August increased by 0.58% monthly. Forex traders can compare this to Chinese New Home Prices for July which increased by 0.59% monthly.
Should price action for the EURAUD remain inside the or breakout above the 1.6015 to 1.6165 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.6100
- Take Profit Zone: 1.6430 – 1.6500
- Stop Loss Level: 1.6000
Should price action for the EURAUD breakdown below 1.6015 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.5945
- Take Profit Zone: 1.5685 – 1.5780
- Stop Loss Level: 1.6015
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