EUR/AUD Likely to Climb Higher as Eurozone M3 Money Supply Set to Grow

EUR/AUD – Technical Analysis for Forex Trading & CFDs.

Australia – CB Leading Index

On Wednesday, at GMT 3:30 p.m., the Conference Board Inc will release the month-over-month leading index for Australia. It measures the changes in the level of a composite index based seven other major fundamental indicators.

The CB leading index aggregates some of the other indicator data. So, Forex investors consider this to be an important representation of the overall Australian economy. However, since most of these data are previously released, the CB leading index tends to have a minimized immediate market impact.

Last month, the CB leading index increased by 0.3. If the positive trend continues this month, it would likely have a bullish influence on the Australian Dollar against other major currencies.

Eurozone – M3 Money Supply

On Friday GMT 9:00 a.m., the European Central Bank will release the year-over-year M3 money supply figure. It measures the changes in the total quantity of issues currency in the greater Europe. The M3 consists of all hard currency in circulation as well as the bank deposits, including in the central bank.

As the M3 money supply increases, it makes funds available for investments. However, an excess money supply can also lead to inflation and liquidity trap in the economy. Hence, the European Central Bank often adjust their interest rate policy based on the current M3 money supply situation. As a result, the quantity of the M3 can act like a leading indicator of the future direction of the economy.

Last month, the Eurozone M3 money supply increased by 4.9%. This month the forecast is set at a 4.9% increase as well.

EUR/AUD Forecast

Since breaking below the uptrend line on December 27, 2017, the EUR/AUD remained range bound. During the last month, it fell around 180 pips but found a strong support around 1.5185 level. However, on January 11, 2018, the EUR/AUD formed a large bullish pin bar. Consequently, it turned bullish and went up to 1.5430 level and found a resistance. Currently, the pair is trading just below the resistance around the 1.5430 level.

Analysts are expecting the Eurozone M3 Money Supply to come out same as last month at 4.9%. On the other hand, the Australian CB leading index has been growing over the last few months but it carries less weight compared to the M3 money supply news on the EUR/AUD valuation. Hence, we believe it would set a bullish fundamental outlook for the EUR/AUD this week. Therefore, if the EUR/AUD closes above the resistance near 1.5430, it would likely attract additional bullish momentum in the market.

Based on our analysis, Australian Forex traders should look out for trading opportunities above this major resistance level around 1.5430.

BTC/AUD Forecast

After falling towards the 12,000 level, BTC/AUD found a strong support and started a bullish retracement and formed an uptrend line. However, on January 21, it broke below the uptrend line and started to move towards the 12,000 level once again. But, after reaching near the 13,000, it found ample support and turned bullish. Earlier today, it broke above the last downtrend line. Currently, it is trading just below the 14,000 level.

After the Korean Financial Services Commission’s recent crackdown on cryptocurrency brokers, South Korean cryptocurrency exchange Korbit announced to stop serving international clients. However, the recent BTC/AUD bullishness suggests that investors have already priced in the disruption in South Korea. Hence, if the BTC/AUD price breaks and closes above the 14,000 level, it will likely attract bullish momentum in the market.

Based on our analysis, Australian bitcoin traders should look out for trading opportunities above this major resistance level around 14,000.

 

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com

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Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com

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