Euro Continues to Rise Against Aussie
- Euro continues to show strength against the Australian dollar
- Australian dollar on the back foot in general
- Longer-term trend higher
The Euro has rallied during the bulk of the week, reaching towards the 1.62 AUD level. The market is continuing to see a lot of strength on dips, and as a result, it appears that value hunters are willing to come in and pick up this currency pair. This is especially telling considering that the Euro is relatively soft in general, which shows just how bad the Australian dollar is doing.
The EUR/AUD pair isn’t a currency pair that people usually pay attention to, but when you look at the weekly chart, you can see a clear uptrend and channel. Whilst the trend is starting to run out of momentum a little bit, the market continues to find the channel supportive, just as the 52 week EMA does as well. The 52 week EMA is a reflection of the trend for the year and, as you can see, it has been relatively reliable as support. At this point in time, the market looks as if it is going to continue to grind higher yet the market has been very choppy towards the upside recently.
Turning our attention to the area above the recent trading session we can see that, whilst the 1.66 level has served as a high previously, this level has been pierced a couple of times lately. This suggests that we are either going to eventually have a strong breakout, as that level will finally give way on a weekly close, or the possibility of a rollover. It’s very likely that the market will break down significantly, but it would need to break down below the 1.55 AUD level to be confirmed. At this point, the market continues to look relatively bullish, but it is also relatively noisy.
A few thoughts
The EUR/AUD pair continues to be bullish, but you should remember that both of these currencies are soft at the moment, as measured against the US dollar. This is the relative strength meter that most currency traders will use, so it will make this pair somewhat erratic and choppy.
That being said, if the market does break down below the 1.55 AUD level it will probably lead to an impulsive selloff. A breakage in the uptrend line underneath would be concerning for buyers and it should be noted that, just a couple of weeks ago, some shooting stars caused resistance. If the uptrend breaks above those it would only increase the pressure to the upside. All things being equal, this is a market that continues to be steady, but not exactly explosive.