EURAUD Forecast / Forex Technical Analysis

EURAUD Forecast – Inflation Enigma in Australia

In today’s comprehensive EURAUD forecast, we will first examine the current economic conditions in Australia. Then, we will meticulously delve into the details of the EURAUD pair’s technical analysis.

EURAUD Forecast – Inflation Enigma in Australia

Bloomberg—The Reserve Bank of Australia (RBA) has recently expressed concerns over the persistently high inflation in the country, particularly in the services sector. In a recent speech, Marion Kohler, the RBA’s Acting Assistant Governor, highlighted this issue. She suggested bringing inflation back within the target range might be more protracted than initially anticipated.

Last week, the RBA raised its cash rate to a 12-year peak of 4.35%, indicating that additional policy tightening might be necessary. The central bank aims to bring inflation within its target range of 2-3% by the end of 2025. However, current inflation trends suggest that achieving this goal might be challenging.

Kohler also pointed out that supply shocks, such as the recent surge in fuel prices, could lead to unexpected increases in headline inflation. These unforeseen events serve as a reminder of the potential hurdles on the path to stabilizing inflation. “The road ahead could be bumpy,” she cautioned. Regarding the labor market, Kohler noted that the RBA anticipates a gradual easing. The unemployment rate, currently at 3.6%, is expected to rise to around 4-1/4% by 2025.

These inflation trends and monetary policy adjustments significantly affect the Australian economy. On the one hand, high inflation and policy tightening can pressure consumers and businesses, potentially slowing economic growth. On the other hand, these measures are necessary to maintain financial stability and prevent runaway inflation. Therefore, while the road ahead may be bumpy, these steps are crucial for the long-term health of the Australian economy.

EURAUD Technical Analysis and Forecast

The EURAUD currency pair is currently in a bullish flag pattern. Bears briefly broke below this flag, but their efforts failed, allowing bulls to regain control from the S1 support level at 1.644. Now, the pair is challenging the R1 resistance at 1.689, with the RSI indicator staying above 50, indicating a bullish market sentiment.

EURAUD Forecast – Inflation Enigma in Australia – Daily Chart

Zooming into the 4-hour chart reveals a long wick candlestick pattern. EURAUD prices dipped to the 23.6% Fibonacci retracement level during this time, while the RSI was overbought. Given the daily chart’s bullish trend, we might see a correction extending to the 38.2% and 50% Fibonacci levels. The October high also supports this potential movement.

EURAUD Forecast – 4H Chart

FxNews analysts advise closely monitoring the Fibonacci retracement levels for bullish candlestick patterns. They also recommend waiting for a break above the October high before placing new long orders on EURAUD.