EUR/AUD Price Analysis — October 1

The EUR/AUD has traded through the week under some bearish pressure since it hit the key resistance at 1.6567 last week and was last spotted trading near the 1.6300 support on Thursday.

The European Central Bank (ECB) announced recently that it was set to ‘tweak’ its major policy objectives, as it continues to battle the Coronavirus pandemic-induced economic fallout. For close to two decades, the ECB has sought to keep inflation just below 2% to tackle consumer price increases. However, given the recent sluggish price increases triggered by the economic crisis, a new inflation target could be implemented to prop-up the economy soon.

Speaking at a meeting with European lawmakers on Monday, ECB Chair Christine Lagarde warned that incoming data could portend further deflation (when inflation rates become negative), indicating that prices are falling rather than increasing.

Also, the EUR has come under further pressure following the second wave of the COVID-19 pandemic sweeping across Europe.

In other news, the Australian dollar (AUD) is not faring any better as it risks extending its decline from its yearly high against the US dollar set on September 1, ahead of the Reserve Bank of Australia’s (RBA) interest rate decision on the 6th of October. It seems that the central bank is considering cutting the Official Cash Rate (OCR) from 0.25% to 0.1% and probably introduce a government bond purchase program soon.

Regardless, the AUD appears to be performing strongly against the EUR and other G8 currencies on Thursday.

EUR/AUD Value Forecast — October 1

EUR/AUD Major Bias: Bearish

Supply Levels: 1.6400, 1.6500, and 1.6567

Demand Levels: 1.6300, 1.6200, and 1.6100

The EUR/AUD continues on its retreat from the 1.6567 strong resistance and is now faced with the 1.6300 psychological level. Given the current momentum, we expect this pair to break below that support line in a bearish continuation towards the 1.6250-200 area.

However, in an unlikely event where it finds strong support at the 1.6300 level, the EUR/AUD could stage a recovery to the 50 SMA at 1.3410.

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