EUR/AUD Drops to New Lows as Strong AUD Follows Better CPI Data

Better-than-expected inflation data from Australia, with the CPI coming in at 3.5% versus the expected 3.4%, has sparked renewed optimism for the Australian Dollar (AUD). This has presented a trading opportunity on the EUR/AUD pair, which is currently hitting new long-term lows, aided by the strong AUD. When fundamental data aligns with technical patterns, it often strengthens the market’s direction, and that appears to be the case here.

On the EUR/AUD chart, we see a descending triangle pattern marked by black lines. This pattern is characterized by a horizontal support level and a descending dynamic resistance. In this instance, there are two resistance lines—one mid-term and one short-term—that together form the descending triangle. The crucial development is the breakout below the horizontal support, which signals a bearish move. As long as the price remains below this former support, now resistance, the sell signal remains valid.

However, if the price were to climb back above the horizontal resistance and close the day there, it would suggest a false bearish breakout, presenting a strong buy signal. For now, though, the bearish scenario seems more likely as long as the price stays below the resistance level.

Source: https://www.axiory.com/analytics/technical-analysis/eur-aud-drops-to-new-lows-as-strong-aud-follows-be