EUR/AUD Likely to Remain Bullish Amid Forecast of Increasing German Trade Balance

EUR/AUD – Technical Analysis for Australian Forex brokers

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Australia – Cash Rate

Tomorrow, at GMT 4:30 a.m., the Reserve Bank of Australia (RBA) released the official cash rate, which is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.

Since short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies, Forex traders pay close attention to any changes in the official cash rate.

The RBA left the cash rate at 1.5% in their last meeting and the forecast for this month is that the RBA will leave the cash rate unchanged at 1.5% for the time being.

Eurozone – German Trade Balance

On Friday, at GMT 8:00 a.m., the Destatis will release the monthly trade balance figure, which measures the difference in value between net import and export of goods over the past month.

The demand for export in Germany is directly correlated with the demand for the Euro, because the German economy makes up a large portion of the overall Eurozone economy. Hence, Forex investors analyze the monthly trade balance in order to gauge the strength of the EURO against other major currencies.

Last month, the German trade balance figure came out at 18.4 billion and the forecast for this month is currently set at 119.2 billion.

Trade Recommendation for the EUR/AUD

EUR/AUD Analysis - Australian forex Brokers

Since December 29, 2016, the EUR/AUD price has gone down by around 1085 pips. However, over the last two weeks, the EUR/AUD started a bullish retracement and last week, the pair broke above the downtrend line in the process. Currently, the EUR/AUD is gradually approaching the resistance level near 1.4025 level.

As the German trade balance is expected to increase by 100 billion over the last month, but the Australian cash rate is expected to remain unchanged at 1.5%, we believe it would set a bullish fundamental outlook for the EUR/AUD this week.

Hence, if the EUR/AUD price penetrates and closes above the 1.4025 level, it would likely attract additional bullish momentum in the market.

Under the circumstances, it would be recommended that Forex traders consider placing a BUY order at market price for the EUR/AUD with their Australian Forex brokers, as soon as it is trading above the 1.4025 level. A possible profit target for this trade would be around the 1.4140 level. On the other hand, Forex traders should consider placing a stop loss order below 1.4080.

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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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