EUR/AUD Outlook:
The EUR/AUD pair is likely to decrease as it is currently 4% below its recent average and near recent lows. Weak consumer confidence data in the Eurozone is further pressuring the euro.
Key drivers:
- Rate gap: The European Central Bank's accommodative stance contrasts with the Reserve Bank of Australia's tightening bias, weakening the euro relative to the AUD.
- Risk/commodities: With oil prices at 90-day highs, the elevated costs can strain European economies, further impacting euro strength.
- One macro factor: Recent robust Australian employment figures raise expectations for interest rate hikes by the Reserve Bank of Australia, supporting the AUD.
Range:
The EUR/AUD is expected to drift within its recent 3-month range as it faces resistance near lows but lacks strong upward momentum.
What could change it:
- Upside risk: A surprising rebound in Eurozone economic indicators could bolster the euro.
- Downside risk: Further increases in Australian commodity prices could enhance the AUD, leading to a quicker decline in the EUR/AUD rate.
