The price of EURAUD has been trading higher as the Euro gains strength ahead of the ECB rate announcement. Could the price break higher?
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The price of EURAUD continues to trade higher as expectations of a 75bps hike from the ECB sees the EURO continue to gain strength. The RBA has recently hiked interest rates to 2.35% the highest level since 2015. However, this announcement was priced in by the market and the Australian Dollar weakened. Inflation in Europe rose to 9.1% through August the highest it’s been for over 20 years. The ECB has been unwilling to hike rates as aggressively as other central banks which caused the EURO to fall. However, recent reports out of the ECB have suggested a 75bps hike is likely which could see the EURO strengthen towards the announcement.
The strength meter has shown that the EURO has been gaining strength recently and the AUD has been weakening. This can often lead to an upward trend forming on EURAUD.
Going to the charts, we can see that the EURAUD price has rebounded from the recent monthly lows. The July monthly volume profile had a value area low around 1.4600, this acted as support recently with the price currently trading within this area. When looking at the August monthly profile (the most recent) we can see the price is approaching the value area high of 1.47450. A break above this level should invite buyers into the market with opportunities to trade towards the July value area high of 1.4918.
Did you see our GBPJPY Analysis? You can see it here.
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