EURAUD Going Down

The recent short idea in EURAUD has been triggered with price moving steadily lower now, on track to hit the first target at 1.5671. Optimism in Australia, following the end of the recent lockdowns there, is putting the focus back on RBA tightening expectations. Given the recent RBNZ rate hike and the broader economic recovery underway in Australia, alongside rising energy prices and broader pressures, there is growing divergence in policy expectations between the ECB and RBA which should keep EURAUD under pressure in the near term. Furthermore, the retail community is still holding around 90% longs, creating scope for a continuation lower with 1.5430 the next objective for bears.

Key Data to Watch

Aside from the broader risk flows which are obviously key to keep an eye on with AUD, Aussie employment data on Thursday will be closely watched. Given the recent lockdowns, the market is looking for unemployment to have crept back up last month. However, provided there are no nasty surprises here, it shouldn’t derail the EURAUD decline.