The EUR/AUD price movement is positively and negatively correlated to several factors, assets and other Forex currency pairs. Here are its main current correlations:
Interest rate spread: Of course, the differential in key interest rates set by the ECB and the Reserve Bank of Australia strongly correlates with this currency pair.
Commodity prices:The Australian dollar is also strongly positively correlated with the cost of certain commodities such as ores, a significant world producer, and the price of gold, iron, coal, and uranium.
Global economic health: Global economic growth is positively correlated with the Australian dollar as the nation is a significant exporter and hence needs other economies for its development.
The issue of the war in Ukraine remains on the agenda. The conflict is still going on, and it has many economic and geopolitical implications for the Old Continent. The Russian president has also said that Finland's decision to join NATO was a "mistake" and that it would have "negative consequences". The escalation of the war tensions in Ukraine and the probable admission of Sweden and Finland to the North Atlantic Treaty Organization (NATO) could amplify the shock waves.
Australians will vote for a new government on Saturday, putting Scott Morrison's conservative government to rest. The centre-left Labor Party led by Anthony Albanese is slightly ahead in the polls. Cost-of-living considerations and national defence are the main concerns of the public.
Technically, the EUR/AUD price is on a short-term bullish trend, initiated after reaching the support at 1.43, but we face significant resistance at 1.52. If we manage to break it on a daily close, the price will go up, which I doubt because of the weakness of the Euro.
Still, everything could happen, especially if the war on Ukraine escalates or if we have a surprise in the Australian elections.
The prices are below 200 MA, and the primary trend is bearish, which could pressure the prices to go down to retest the support at 1.43. As you can see on the chart, we have a little trend line for the bullish movement from April, the break of this line is a strong indicator of a bearish scenario to rejoin the 1.43 level.
The euro is at historic lows against many other currencies, while the Australian dollar benefits from several fundamental elements to support it. Little change is expected in the coming months on this front. The pair failed to break through the 1.52 resistance level, indicating a high probability of continuing its current downtrend.
The 1.43 support and the 1.52 resistance are the main level of prices to watch, but we think the pair will continue its downfall.
Soufiane holds two master degrees in Corporate Finance and Financial market from ESLSCA Business School Paris (France) He has been an active stock trader since 2015. Soufiane's genuine interest in trading and eloquent writing makes him a great addition to the Perfect Your Trading team.