EUR/AUD, EUR/USD Rebounds May Offer Selling Opportunites
- Euro-Zone CPI at lowest in over four years (0.5% y/y).
- Economic calendar is stuffed on Monday across the globe.
To keep up with developments central banks and their policy changes, be sure to sign up for my distribution list.
The Euro is staging an impressive comeback this morning despite a bout of the worst inflation data in over four years. The Euro jumped from intraday lows against its major counterparts to its daily highs within minutes of the report, despite the theoretical implication that weaker inflation implies easier monetary policy.
The obtuse move - indicative of a 'buy the rumor, sell the news' outcome - suggests that traders remain uncertain and fearful of being too bearish on the Euro ahead of the ECB's policy meeting this Thursday, as history hasn't been kind to Euro bears since the November 7, 2013 rate cut (EURUSD +2.71%, EURAUD +4.99%, EURJPY +7.54%).
The EURUSD outcome is a bit surprising but a bullish bias wouldn't be appropriate until last week's highs near 1.3870 are broken. For EURAUD, the rebound today fits in neatly with our expectation for a small rally last week, and we look towards 1.4995/5010 (head and shoulders neckline) to serve as resistance.
--- Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail email@example.com
Follow him on Twitter at @CVecchioFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.