News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • 🇮🇹 Business Confidence (JUN) Actual: 114.8 Expected: 112 Previous: 110.9 https://www.dailyfx.com/economic-calendar#2021-06-25
  • 🇮🇹 Consumer Confidence (JUN) Actual: 115.1 Expected: 112 Previous: 110.6 https://www.dailyfx.com/economic-calendar#2021-06-25
  • Hang Seng Tech Index Attempts to Break key Resistance - #HSTECH chart https://t.co/zyCoXqgoVz
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 89.84%, while traders in GBP/JPY are at opposite extremes with 68.93%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/jaai5GlT9Q
  • Heads Up:🇮🇹 Business Confidence (JUN) due at 08:00 GMT (15min) Expected: 112 Previous: 110.2 https://www.dailyfx.com/economic-calendar#2021-06-25
  • Heads Up:🇮🇹 Consumer Confidence (JUN) due at 08:00 GMT (15min) Expected: 112 Previous: 110.6 https://www.dailyfx.com/economic-calendar#2021-06-25
  • Heads Up:🇪🇺 European Council Meeting due at 08:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-06-25
  • - Will implement macroprudential measures to fight with inflation if needed
  • Turkish Finance Minister - Turkey to grow more than government forecast in 2021, expecting around 20% growth in Q2 - Central Bank stance on price stability is important
  • MACD who? The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA). Find out how you can incorporate MACD into your trading strategy here: https://t.co/ZNs4Qi8ieG https://t.co/txBC7G5EcY
EUR/AUD Price Outlook Bearish, Commodity Currencies to Strengthen

EUR/AUD Price Outlook Bearish, Commodity Currencies to Strengthen

Martin Essex, MSTA, Analyst

EUR/AUD price, news and analysis:

  • The outlook for EUR/AUD is bearish as commodity currencies such as the Australian Dollar benefit from the current global economic expansion after the contraction caused by the coronavirus pandemic.
  • Australia produces many of the raw materials like iron ore, copper and aluminum that will be in demand as economic growth picks up, and that should benefit AUD against currencies such as EUR, CHF and JPY.
Advertisement

EUR/AUD outlook bearish

As the global economy expands after the savage downturn caused by the Covid-19 pandemic, commodity currencies like the Australian Dollar are well placed to advance. In particular, the outlook for EUR/AUD is bearish as the pair has actually been strengthening since late February despite all the signs of an economic recovery.

As the chart below shows, EUR/AUD hit a recent low at 1.5253 on February 25 and has since climbed to just over 1.55. While there is trendline support currently around 1.5360, it would be no surprise if that level were challenged and eventually breached.

EUR/AUD Price Chart, Daily Timeframe (October 1, 2020 – May 5, 2021)

EUR/AUD Price Outlook Bearish, Commodity Currencies to Strengthen

Source: IG (You can click on any of the charts for larger images)

Australia is a major producer of raw materials such as iron ore, copper and aluminum that should all be in demand from industry as it picks up after the downturn. In fact, minerals and fuels accounted for 47% of its total exports according to the latest data.

EUR/AUD Price Outlook Bearish, Commodity Currencies to Strengthen

Source: Australian Department of Foreign Affairs and Trade (data in A$)

Among these, iron ore is Australia’s major export, followed by natural gas and gold.

EUR/AUD Price Outlook Bearish, Commodity Currencies to Strengthen

Source: DFAT (data in A$)

Taking iron ore as an example, the price has advanced by 94% in the past 15 months, reaching record highs as supply has been unable to keep pace with demand from China, where steel output has grown by 30% over the past five years.

Iron Ore Price Chart, Daily Timeframe (January 8, 2020 – May 5, 2021)

EUR/AUD Price Outlook Bearish, Commodity Currencies to Strengthen

Source: IG

Similarly, the price of copper has more than doubled since its low back in March 2020 so it is remarkable that the Australian Dollar has not benefited more than it has. A drop in EUR/AUD would therefore be no surprise, prompting this bearish call on the cross and, by extension, strength in other commodity currencies such as CAD and NZD as well.

--- Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES