The post EUR/AUD edges higher despite quite bearish fundamentals appeared on BitcoinEthereumNews.com.

EUR/AUD is rising despite a run of weak data from the Eurozone and lower inflation expectations.  In comparison data from Australia has been relatively robust of late, particularly sentiment and wage data.  Monetary policy is diverging with the ECB likely to cut interest rates further, leading to a bearish backdrop for EUR/AUD.  EUR/AUD is exchanging hands in the 1.6630s on Wednesday, up a third of a percent on the day. The pair has fallen about 3.3% in just over a week since the 1.7186 high reached on August 5. Despite the current uptick, the short-term trend is bearish and since “the trend is your friend” the pair is vulnerable to more downside.  EUR/AUD has weakened primarily due to an ebbing away of US recession fears which temporarily weakened the Australian Dollar (AUD) due to its sensitivity to negative risk sentiment. The differing outlooks for monetary policy of the two currencies and comparably resilient recent Australian macroeconomic data are further drivers of the pair’s decline since the August 5 high.  On Wednesday Eurostat released the latest Gross Domestic Product (GDP), Employment Change and Industrial Production for the Eurozone. The GDP was a second estimate for Q2 and showed no change from the preliminary reading, Employment Change for Q2 was likewise unchanged. Industrial Production in June, however, fell below expectations. The future course of rates Interest rates are a key driver of FX markets since international investors like to park their money where it can earn the highest return. This increases demand for currencies where interest rates are high. The difference marginally benefits the AUD since the Reserve Bank of Australia (RBA) has set a slightly higher policy rate of 4.35% compared to the 4.25% set by the European Central Bank (ECB). The difference is marginal, however, and more important perhaps is…

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Filed under: News - @ August 14, 2024 2:23 pm