The AUD/EUR bias is bullish-to-range-bound, as the Australian dollar is positioned above the 90-day average and in the upper half of the three-month range.
Key drivers:
- Rate gap: The Reserve Bank of Australia has hinted at potential interest rate increases, which could support the AUD compared to the European Central Bank's neutral policy stance.
- Risk/commodities: Rising oil prices may boost sentiment for commodity-linked currencies like the AUD, although the euro remains under pressure from weaker economic data.
- One macro factor: China's economic recovery continues to impact the AUD, as subdued demand for Australian exports weighs on its performance.
Range: Expect the AUD/EUR to hold within the recent three-month range, as both currencies experience mixed influences.
What could change it:
- Upside risk: A resurgence in Chinese demand for Australian commodities could strengthen the AUD.
- Downside risk: Continued disappointing economic data from the Eurozone may deepen pressure on the euro, affecting the pair's dynamics.
