Bias: bullish-to-range-bound, AUD/EUR sits above its 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The RBA signals possible hikes in 2026, while the ECB is expected to keep rates unchanged near term.
- Risk/commodities: Oil trades near multi-week highs with volatility; firmer oil generally supports the AUD through its commodity link, while the euro is less tied to energy costs.
- Macro factor: China’s uneven rebound dampens Australian iron ore demand, weighing on the AUD.
Range: AUD/EUR is likely to hover near the upper end of the 3-month range, with drift and occasional tests of the highs if data surprises.
What could change it:
- Upside risk: a surprise RBA rate move toward tightening boosts the AUD.
- Downside risk: renewed weakness in China trimming Australian commodity demand.