EUR/AUD aims for 1.5900 as RBA minutes hurts the Aussie
|- EUR/AUD trades near 1.5870 at the initial Asian trading on Tuesday.
- The pair increased to the day’s high of 1.5890 after RBA minutes.
- Eurozone ZEW economic sentiment index will be next to watch.
The EUR/AUD pair currently trades around 1.5870 during the early Asian session on Tuesday. Minutes of the recent Reserve Bank of Australia (RBA) meeting, held on February 05, weakened the Australian Dollar after the board saw "significant uncertainties" on the economic outlook. The pair did rise Monday on a report of no immediate US tariffs on the EU cars.
EUR/AUD reversed earlier losses on Monday after the Reuters report quoted the European Commission President Jean-Claude Juncker saying in an interview to German newspaper Stuttgarter that the U.S. President Trump gave him his word that there wouldn't be any tariffs on European cars for the time being. Earlier during the day, the Euro weakened across the board on expectations of higher tariffs on the EU cars after the US Department of Commerce submitted its report to the White House about how auto imports can be considered as a threat to the US national security.
During early Tuesday, the RBA minutes increased Aussie selling and further extended EUR/AUD recovery. As per the minutes, uncertainty on economic outlook mainly driven by consumption remains a problem for the bank. The Australian central bank reoterated the initial meeting statement saying “Probabilities around rate change scenarios were more evenly balanced than before”. Additionally, an increase in downside risk to the economy was also accepted by the board.
With the RBA minutes reiterating its bearish bias conveyed earlier in the month, coupled with downbeat comments on risk and consumption, Aussie sellers came in action. The EUR/AUD pair increased nearly 50 pips to 1.5890 from 1.5840 after the minutes released.
Looking forward, the February Eurozone ZEW economic sentiment release will be important for the pair traders to watch while giving equal importance to the updates from the White House on auto. The US markets will be open after Monday’s break and hence increased volatility can be expected.
EUR/AUD Technical Analysis
The pair needs to surpass the resistance line of a short-term descending trend-channel, at 1.5900 now, in order to target 1.5940 and 1.6000 resistances.
In case prices fail to sustain recent recovery, 1.5820 and support-line of the aforementioned channel, at 1.5730, should gain market attention.
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