EUR/AUD Price Analysis — January 21

The EUR/AUD is starting to gain some bullish momentum, following a retest and rejection from the 1.5600 support level and a bullish Euro.

The European Union (EU) reported yesterday that the Euro Area Inflation Rate dropped by 0.3% YoY in December, while the Core Inflation Rate rose by 0.2%—fulfilling analysts’ forecasts.

Meanwhile, prices remained weakened in the Euro Area because of the damaging impact of the second wave of coronavirus in the region. This factor is responsible for the weakness seen in the Euro for weeks now.

Moving on, the FX market will be watching the ECB closely today, as it is scheduled to release its Interest Rate Decision and other commentaries. Speculators are sure that the rates will remain unchanged, while traders will focus on the ECB’s evaluation of the prevailing economic situation.

In other news, Australia recently reported a positive Unemployment Rate figure, recording a decline from 6.8% in November to 6.6% in December, surpassing speculators’ forecasts. Meanwhile, the Employment Change data showed that employment in the country jumped by 50k in December, also in line with forecasts.

However, a slowdown in full-time employment kept Aussie bulls from placing aggressive bets, which has diminished the prospects for significant gains for the currency against the EUR.

EUR/AUD Value Forecast — January 21

EUR/AUD Major Bias: Bullish

Supply Levels: 1.5675, 1.5800, and 1.5900

Demand Levels: 1.5600, 1.5500, and 1.5400

The EUR/AUD appears to be gearing up for a bullish rally in the coming hours and days. The pair have recorded a double-bottom pattern on our 4-hour chart, indicating that a bullish retracement might be around the corner. The 1.5600 psychological line—which hasn’t been broken since December 2018—will likely serve as a repellent against AUD bulls in the meantime.

Apart from that, the decline to the 1.5600 support also coincides with the position of our descending channel, further bolstering the prospect of a bullish retracement soon.

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