EUR/AUD hits the top of the Asia-London watchlist with potential economic catalysts from both Australia and Europe on deck. Will they push the bulls to retest major resistance once again?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at NZD/USD as it forms a potential bullish price signal, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Australia AIG Services Index at 10:30 pm GMT
RBA Chart Pack at 1:30 am GMT (July 7)
Japan Leading Economic Index at 5:00 am GMT (July 7)
Germany Industrial Production at 6:00 am GMT (July 7)
U.K. Halifax House Price Index at 6:00 am GMT (July 7)
France Trade Balance at 6:45 am GMT (July 7)
Italy Retail Sales at 8:00 am GMT (July 7)
U.K. Labour Productivity at 8:30 am GMT (July 7)
What to Watch: EUR/AUD
On the one-hour chart above of EUR/AUD, we can see sideways action in the pair all throughout the month of June, ranging between roughly 1.5700 – 1.5800. And we just saw strong volatility over the Tuesday session as broad risk sentiment soured quickly off of weaker-than-expected sentiment updates from both Europe and the U.S. This is likely the cause for the big pop in EUR/AUD from making lows just above the 1.5600 handle to its current trading area around 1.5770.
Looking forward, the volatility may not stop here for EUR/AUD with a business services sentiment from Australia and German industrial production data coming soon. These aren’t usually major catalysts, but sentiment shifting a bit, they might be just enough to keep Tuesday’s action going.
We’ll be watching out for a retest of the top of the range around 1.5850 over the next session or two, and if the Australian data surprises us with a positive read AND we see weak German data, we’ll then be on the lookout for bearish reversal candles in EUR/AUD before considering a short position.
With a daily average true range of around 85 pips, reaching these areas are not out of the question, especially if volatility continues to remain high on fears that the global recovery is slowing down.