EUR/AUD Price Analysis — December 10

The EUR/AUD traded on a bearish momentum on Thursday as bears gain the upper hand. The European Central Bank (ECB) has alluded through posturing that it is set to “recalibrate its instruments” in today’s meeting. That said, we are likely to see a EUR500 billion increase in PEPP, which will be used to bolster monetary stimulus across the eurozone at least through to the end of 2021.

Meanwhile, the ECB does the unexpected and cut its discount rate even further into negative territory. While using negative interest rates for extended periods could have its benefits, there’s also the possibility that it could have adverse effects on the EUR. Furthermore, a deteriorating political cohesion in the eurozone or the EU, which seems increasingly likely by the day, could undermine demand for the euro even further.

In other news, commodity performance of late remains very supportive for the Aussie, with the iron ore index at a seven and a half year high of $150. This report builds a strong case for the near-term prospects of the AUD.

Meanwhile, the Australia-China trade relations continue to falter. Following China’s MOFCOM decision to increase the tariff on Australian wine from 107.1% to 212.1%, countervailing deposits were increased by 6.3% to 6.4% some hours ago.

With the prospects for further counter-sanctions and tariff hikes still in the mix, the Aussie could see a slowdown in its bullish momentum.

EUR/AUD Value Forecast — December 10

EUR/AUD Major Bias: Bearish

Supply Levels: 1.6200, 1.6330, and 1.6400

Demand Levels: 1.6100, 1.6000, and 1.5900

The EUR/AUD has broken out of its sideways momentum and is now barrelling towards lower support levels. After failing on three occasions to break above the 1.6400 resistance, the EUR/AUD has now been strengthened to take the price lower.

At press time, the pair is set to take on the crucial 1.6100 support line. It is worth mentioning that this line has been unbroken despite several attempts for the past six months.

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