The EURAUD exchange rate has retail sales from Australia and an inflation number from Europe to test the recent uptrend.
EURAUD – Daily Chart
The EUR v AUD has hit an obstacle at 1.67843 and there is support at 1.6493 if the pair wants to move back into the trading range. Those two levels will be important for any future breakout.
Australian retail sales data is released at 8:30am HKT with analysts expecting a reading of -0.8% which would be a downfall from 0.8% in the previous month. That highlights that a holiday boost in spending has regressed back to the pressured consumer environment.
Eurozone consumer price inflation data is released at 6pm HKT with markets expecting a slight dip from 2.7% to 2.6% annually.
The market is still digesting the recent rate cut from the European Central Bank last week. The ECB decided to cut its benchmark rate by 0.25% as France and Germany struggle to create growth. The euro may be pulling back as investors see that trend continue.
ECB President Christine Lagarde said that the eurozone was “set to remain weak in the near term” after cutting rates to 2.75%. The latest cut is the fifth since June and markets expect two or three more this year due to economic fears.
Further uncertainty is coming from Donald Trump’s tariff threat and the Australian dollar may be seen as a safe haven and the EUR v AUD could dip back to support levels.
The exchange rate will also be driven by the dynamics of the Australian economy and interest rate. Finance expert Mark Bouris has said that the Reserve Bank of Australia should cut interest rates, saying Aussie monetary policy is pushing businesses and individuals to the brink.
Over the past two years, business closures have surged to 26,000 which is a record. November 2023 was severe with the highest number of monthly business closures on record, with 1,442 businesses shutting down in one month.
The medium-term trends are a worry for both economies but the short-term will be driven this week by retail, inflation and tariff talk.
