EURAUD Forecast – November-29-2023


Fx News – In today’s EURAUD forecast, we start with the latest economic updates from Australia, followed by a detailed examination of the EURAUD’s behavior on the 4-hour chart.

Australia’s Bond Yields and Inflation

Bloomberg – The yield on Australia’s 10-year government bonds recently took a dip, reaching a seven-week low of below 4.4%. This decline mirrors a similar trend in the US, where bond yields have also fallen. The main reason behind this trend in the US is the recent comments from American policymakers. These officials suggest a more cautious approach, indicating that the Federal Reserve might not increase interest rates further and could possibly reduce them next year. Such statements by policymakers are often referred to as ‘dovish’, which means they are in favor of lower interest rates to stimulate economic growth.

In Australia, new economic data reveals some changes in inflation rates. The monthly inflation rate for October was reported at 4.9%, which is a decrease from September’s 5.6% and also lower than the predicted 5.2%. This slowing down in inflation, especially in goods and travel expenses, is a significant factor affecting the bond yields. Generally, when inflation rates are high, bond yields tend to increase as investors seek higher returns to offset the inflation impact.

Adding to the mix is Michele Bullock, the Governor of the Reserve Bank of Australia, who has recently highlighted a growing concern. She noted that domestic demand in Australia is increasingly pushing up inflation. To manage this, she suggests that interest rates may need a “substantial” increase. This is crucial because central banks like the Reserve Bank of Australia often raise interest rates to cool down inflation by making borrowing more expensive, thereby reducing spending and demand.

Investors and market analysts are now closely watching the situation. They estimate there’s about a 50% chance that the Reserve Bank of Australia will raise interest rates again next year. This kind of estimation is important because it helps businesses and consumers prepare for potential changes in borrowing costs, which can impact everything from mortgage rates to business loans.

EURAUD Forecast: Potential Uptick Towards 1.665

During today’s trading, the EURAUD pair dipped below the 78.6% Fibonacci retracement level. Despite this, the bears were unable to maintain lower prices, as indicated by a bullish engulfing pattern on the 4-hour chart, suggesting a potential reversal. This is also supported by the stochastic oscillator moving out of the overbought zone.

EURAUD Forecast - November-29-2023

EURAUD Forecast – 4H Chart

However, the overall trend remains bearish unless the pair surpasses the 1.665 level (the 50% Fibonacci point). The present price movements, combined with indicators and candlestick patterns, hint at a possible upward swing in EURAUD, targeting the 1.665 mark.

Should the pair close below the 78.6% Fibonacci level and stabilize there, this EURUAD forecast bullish would become invalid.

  • 29 November 2023
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