EUR/AUD Worth Outlook Bearish, Commodity Currencies to Strengthen

EUR/AUD value, information and evaluation:

• The outlook for EUR/AUD is bearish as commodity currencies such because the Australian Greenback profit from the present world financial enlargement after the contraction brought on by the coronavirus pandemic.
• Australia produces most of the uncooked supplies like iron ore, copper and aluminum that will likely be in demand as financial development picks up, and that ought to profit AUD in opposition to currencies corresponding to EUR, CHF and JPY.

EUR/AUD outlook bearish

As the worldwide financial system expands after the savage downturn brought on by the Covid-19 pandemic, commodity currencies just like the Australian Greenback are properly positioned to advance. Particularly, the outlook for EUR/AUD is bearish because the pair has truly been strengthening since late February regardless of all of the indicators of an financial restoration.

Because the chart under reveals, EUR/AUD hit a current low at 1.5253 on February 25 and has since climbed to only over 1.55. Whereas there’s trendline assist at present round 1.5360, it could be no shock if that degree have been challenged and ultimately breached.

EUR/AUD Worth Chart, Day by day Timeframe (October 1, 2020 – Could 5, 2021)

Supply: IG (You possibly can click on on any of the charts for bigger photographs)

Australia is a significant producer of uncooked supplies corresponding to iron ore, copper and aluminum that ought to all be in demand from trade because it picks up after the downturn. Actually, minerals and fuels accounted for 47% of its whole exports in keeping with the newest knowledge.

Supply: Australian Division of International Affairs and Commerce (knowledge in A$)

Amongst these, iron ore is Australia’s main export, adopted by pure gasoline and gold.

Supply: DFAT (knowledge in A$)

Taking iron ore for instance, the worth has superior by 94% previously 15 months, reaching report highs as provide has been unable to maintain tempo with demand from China, the place metal output has grown by 30% over the previous 5 years.

Iron Ore Worth Chart, Day by day Timeframe (January 8, 2020 – Could 5, 2021)

Supply: IG

Equally, the worth of copper has greater than doubled since its low again in March 2020 so it’s outstanding that the Australian Greenback has not benefited greater than it has. A drop in EUR/AUD would due to this fact be no shock, prompting this bearish name on the cross and, by extension, energy in different commodity currencies corresponding to CAD and NZD as properly.

— Written by Martin Essex, Analyst

Be happy to contact me on Twitter @MartinSEssex