EUR/AUD Buyers Face Resistance Amid Australian Dollar Weakness

Market Overview

The Australian dollar declined on Tuesday as market sentiment deteriorated due to concerns over a fresh round of US tariffs and the potential for reduced global trade volumes. This weakness provided support for EUR/AUD, allowing the pair to break its downward trendline and push toward higher resistance levels. Investors are closely monitoring economic data and central bank policy guidance, particularly with key inflation figures due this week that could influence the Reserve Bank of Australia’s (RBA) next steps.

Technical Analysis

On the four-hour chart, EUR/AUD has successfully broken above its previous downtrend and now trades above the 100-period moving average, reinforcing a short-term bullish outlook. Buyers have managed to clear the 1.65192 resistance level, extending the rally toward the 127.2% Fibonacci extension of the latest bearish swing at 1.65433. A sustained break above this level could trigger a continuation toward 1.65740 and 1.66078, reinforcing the upward momentum.

Momentum indicators also support the bullish bias. RSI remains above 50, indicating buyer control, while MACD remains in positive territory with expanding histogram bars, signaling growing bullish momentum.

However, failure to maintain momentum above 1.65433 could result in a pullback, with initial support at 1.64854. A break below this level would shift focus to the 1.64306 support zone, which, if breached, would invalidate the bullish outlook and confirm a reversal.

Key Technical Levels

• Resistance Levels: 1.65433, 1.65740, 1.66078
• Support Levels: 1.65192, 1.64854, 1.64306

Fundamental Drivers

The latest ANZ consumer sentiment survey indicated that confidence among Australian households has reached its highest level since mid-2022. Optimism is linked to recent monetary easing measures, which have alleviated financial pressure on consumers. However, despite the improvement in sentiment, the RBA remains cautious, as sustained consumer spending could delay further rate cuts.

The primary focus for traders will be the Australian inflation report, set for release on Wednesday. Forecasts suggest a rise in the headline Consumer Price Index (CPI) to 2.6%, driven in part by the expiration of government energy subsidies. If inflation remains above the RBA’s 2-3% target range, expectations for additional rate cuts could diminish, potentially offering support to the Australian dollar.

Concluشsion

EUR/AUD remains in an upward trajectory, with buyers testing the 1.65433 resistance level. A decisive break could pave the way for further gains toward 1.66078. However, if buyers fail to push through, the pair may retrace toward 1.64854. Traders will be closely watching Australia’s inflation data, as it could determine the RBA’s policy stance and influence the next directional move in EUR/AUD.

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