EUR/AUD Breakout Could Grow Legs
- EUR/AUD breaking out above well-tested resistance
- Level dates back to 2015, but been in play a lot in past two years
- Could run hard with a risk-off event
EUR/AUD has had significant play around the 16555 level since early 2019, with the origination of the level dating back to August 2015 when markets got roiled on Chinese slowdown fears. But the recent action around it pre and post corona panic cemented it as a level of significance.
Given how much time has been spent around 16555 the 200-day has become hinged to the same vicinity since May. The breakout could be rather significant as long as it holds. In the absence of a risk-off event we could see 17500, with the help of a sizable risk-off event we could see much higher levels.
The correlation between the VIX and EUR/AUD is typically positive across all time-frames, with the past year holding a statistically significant 0.91. If stocks sell off then look for the pair to spike along with volatility.
Watch for a retest of prior resistance on a pullback, it could offer a low risk entry for would-be longs. A breakdown back below 16500 will bring the breakout into question and put price back inside the range it had been suck in since June, and on that a neutral stance is likely warranted.
EUR/AUD Daily Chart (breaking away from long-term resistance)
EUR/AUD Weekly Chart (2015 origination)
Resources for Forex Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.