Daily Forex News and Watchlist: EUR/AUD

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Risk-on flows seem to be in play lately, but could all this change during the release of the global flash PMIs?

Here’s what I’m watching on EUR/AUD.

Before moving on, ICYMI, yesterday’s watchlist looked at USD/CHF’s range ahead of the FOMC minutes. Be sure to check out if it’s still a good play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Feb FOMC minutes revealed that majority of policymakers are worried about easing policy too quickly and emphasized importance of incoming data in judging if inflation is moving sustainably to 2%

New Zealand Jan trade deficit widened from 368 million NZD to 976 million NZD vs. estimated 200 million NZD shortfall, as exports fell 7.1% y/y while imports dropped 20% y/y

Australia’s flash manufacturing PMI dipped from 50.1 to 47.7 in Feb, flash services PMI up from 49.1 to 52.8 to reflect shift to industry growth

Japanese flash manufacturing PMI fell from 48.o to 47.2 to signal steeper contraction in February

New Zealand credit card spending dipped 0.3% year-over-year in January vs. earlier 4.3% gain

Small Chinese banks reportedly cut deposit rates while authorities banned institutional investors from selling equity holdings during the 30 minutes at the open and close of each trading day

French flash manufacturing PMI jumped from 43.1 to 46.8 vs. 43.5 forecast, flash services PMI up from upgraded 45.4 reading to 48.0 vs. 45.7 forecast

Price Action News

Overlay of USD vs. Major Currencies Chart by TradingView

Overlay of USD vs. Major Currencies Chart by TradingView

It was a rally-and-reverse kind of New York session for the U.S. dollar, as hawkish remarks from the FOMC minutes did little to sustain the climb.

Policymakers reiterated the risks of cutting rates too early, citing that they’d rather wait for more data to gauge if inflation is returning sustainably to their target. Still, FOMC officials noted that rates are at the peak of their cycle and mentioned uncertainties about keeping borrowing costs at restrictive levels.

All in all, it seemed the mixed message of the minutes also translated to a mixed run for the U.S. currency, as it held on to its gains to the yen but edged further south to the franc, Loonie and euro.

Upcoming Potential Catalysts on the Economic Calendar:

U.K. flash manufacturing and services PMIs at 9:30 am GMT
Canadian headline and core retail sales at 1:30 pm GMT
U.S. flash manufacturing and services PMIs at 1:30 pm GMT
U.S. existing home sales at 3:00 pm GMT
EIA crude oil inventories at 3:00 pm GMT
New Zealand quarterly retail sales at 10:45 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action!  ️

EUR/AUD 15-min Forex Chart by TradingView

EUR/AUD 15-min Forex Chart by TradingView

This forex pair has been trading below the resistance around 1.6530 for quite some time, and it looks like another test of the ceiling is taking place.

Euro zone flash PMI figures might be a strong catalyst for a move, as the manufacturing and services sectors in the region’s top economies are slated to stay in contraction despite slight improvements.

Then again, Australia’s numbers came in mixed, as the manufacturing sector saw a deeper contraction while the services industry reported a return to industry growth.

Still, Chinese stimulus efforts might be enough to keep the commodity currency supported for the time being, especially since authorities are making moves to prevent the stock market rout from worsening.

A double top formation can be seen right below this upside barrier near R1 (1.6540), also suggesting that a short-term selloff might be in the cards.

With that, a break below the neckline and pivot point level (1.6500) at a major psychological handle could be enough to confirm that a drop to the next downside targets is underway. If this happens, EUR/AUD might be on track towards testing the previous lows at 1.6460 near S1.

 

 



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