EUR/AUD Set To Decline Further As Price Breaks Below Major Uptrend Line

Eurozone – German PPI

On Thursday, at GMT 7:00 a.m., the Destatis will release the German Producer Price Index (PPI), which measure the changes in the price of sold goods by the German manufacturers in the previous month.

Since manufacturers increase their prices when the cost of production goes up, Forex investors consider the German PPI to be a leading indicator of the overall German consumer inflation. Also, as Germany makes up a large portion of the overall Eurozone economy, its consumer inflation situation can have a substantial impact on the valuation of the Euro.

Last month, the German PPI increased by 0.2% and the forecast for this month is also set at an additional 0.2% increase.

Australia – CB Leading Index

Later, at GMT 3:00 p.m., the Conference Board Inc will release the month-over-month leading index for Australia, which measures the changes in the level of a composite index based seven other major fundamental indicators.

Since the CB leading index aggregates some of the other indicator data, Forex traders 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 0.4% and if the trend continues, it would likely add bullish pressure on the Australian Dollar against other major currencies.

EUR/AUD Forecast

Since reaching the resistance near 1.4300 level on March 27, 2017, the EUR/AUD price went down by around 380 pips and found support near the uptrend line. However, last week, the EUR/AUD penetrated and broke below this uptrend line and currently trading near the support around the 1.4000 level.

As the Australian CB leading index is has gone up by 0.4% last month and there is a good possibility that this fundamental indicator would likely increase this month as well, we believe it would set a bearish fundamental outlook for the EUR/AUD this week.

In that scenario, if the EUR/AUD price closes below the support level around 1.4000 level, it would likely attract additional bearish momentum in the market. Hence, Forex traders should look out for trading opportunities below this major support level around 1.4000.

 

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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