EUR/AUD Risks Larger Pullback as Bullish Momentum Fades
EUR/USD may continue to track the range from earlier this year as the European Central Bank (ECB) remains in no rush to alter the monetary policy outlook, but recent price action in EUR/AUD warns of a larger pullback as the bullish momentum abates.
Despite signs of a growing dissent within the ECB, the Governing Council appears to be on course to retain the current policy at the next meeting on April 26 as ‘domestic price pressures remain muted overall and have yet to show convincing signs of a sustained upward trend.’
It seems as though the ECB will continue to wait out the clock in an effort to avert a ‘taper tantrum,’ but more of the same from President Mario Draghi and Co. is likely to keep EUR/USD within the 2018 range as market participants push out bets for an ECB rate-hike. Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!
EUR/USD Daily Chart
The failed run at the March-high (1.2476) may continue to foster range-bound conditions in EUR/USD, with the topside largely capped by the 1.2370 (61.8% expansion) to 1.2430 (50% expansion) region, while near-term support comes in around 1.2230 (50% retracement).
EUR/AUD Daily Chart
EUR/AUD pares the decline from earlier this month after struggling to close below the 1.5880 (78.6% expansion) region, but the failed run at the 2016-high (1.6252) keeps the near-term outlook tiled to the downside as bullish momentum fades, with the Relative Strength Index (RSI) highlighting a key trigger as it snaps the upward trend from earlier this year.
Need a close below 1.5880 (78.6% expansion) to bring the downside targets on the radar, with the first area of interest coming in around 1.5720 (23.6% expansion) followed by the 1.5620 (61.8% expansion) region, which lines up with the March-low (1.5623).
Additional Trading Resources
Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.
Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.
--- Written by David Song, Currency Analyst
To contact David, e-mail firstname.lastname@example.org. Follow me on Twitter at @DavidJSong.
To be added to David's e-mail distribution list, please follow this link.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.