- Summary:
- The EURAUD pair is aiming at key resistance for a third week but ECB concerns may limit the potential updside for the single currency.
The EURAUD pair is aiming at key resistance for the third-consecutive week but ECB concerns may limit the potential upside. Policymaker Ignazio Visco voiced his concerns about the recent rally in the Euro and underlined the point that all ECB members were in agreement. Vasco said: “The euro’s recent strengthening is worrying us because it generates further downward pressures on prices at a time when inflation is already low”.
Tomorrow sees the release of German inflation with economists expecting a negative read of -0.1%. We also have the release of core inflation from the Eurozone on Friday and a 0.5% figure is the expectation. If these numbers paint a deflationary picture then the ECB will be under pressure to act on both the stimulus package and the Euro’s appreciation.
Today could be a defining moment for the single currency as the central bank’s President Christine Lagarde gives a testimony. Many economists still expect the ECB to add to the 1.35 trillion euro bond-buying program later in the year in order to avoid deflation and this could also be a key statement in today’s speech.
The other headwind for Euro is the continuing surge in virus cases in the Eurozone. France listed 11,000 new cases yesterday and the U.K. continues to impose new restrictions which means that the travel blocks between Britain and Europe will continue.
EURAUD Technical Outlook
The EURAUD failed at the 1.65500 level and is now pulling back for a second week and the path ahead will likely be determined by the data in the coming days. A push through resistance could see good gains ahead, whilst a retreat would see the pair target 1.6400 initially. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.
EURAUD Daily Chart
