EURAUD tests a key support level at 1.5450 ahead of German and Australian data.
Germany will have consumer confidence data, while the Australian economy will look at the latest inflation.
EURAUD – Weekly Chart
The GfK German consumer confidence data has been rebounding slowly from an October bottom at -42.8. That was a steady decline from -6.7 in February of last year. The numbers have made a slow recovery as consumers remain cautious about interest rates and inflationary costs. However, analysts expect another improvement to the -33 level.
Australia is expected to see another rise in inflation, from 7.3% to 7.5%. Still, the country’s treasurer expects the worst to be over. Ahead of the Australian Bureau of Statistics (ABS) data for the final quarter of 2022, Chalmers said he was optimistic that price increases would now moderate in 2023. He added that cost of living pressures would continue to hurt millions of Australians. Still, he would provide some relief in the coming federal budget in May.
“The Australian economy will begin to soften a bit this year, which is the inevitable likely consequence of higher interest rates and a slowing global economy,” Chalmers said.
“That’s why our economic plan is cost-of-living relief in a responsible way and growing the economy without adding to these inflationary pressures,” Chalmers said.
The Aussie dollar is gaining this week, and the double dose of data will determine whether the 1.5400 level holds for the EURAUD.
The European Central Bank has been hawkish with plans for 50 bps interest rate hikes to take the base rate to a “restrictive” level more in line with the US Federal Reserve’s 4%. “Expect us to raise rates by 0.5% in February and March and expect us to not be done by then and that more steps will follow in May and June,” said Klaas Knot, Dutch central bank chief.
