EUR/AUD Sellers Prepare to Extend Downtrend as Euro Weakness Persists
Market Overview
The euro remains under renewed selling pressure against the Australian dollar as weaker-than-expected Eurozone PMI data weighs on sentiment. The latest figures indicate that economic activity in the region contracted more than forecasted, reinforcing concerns over sluggish growth. Meanwhile, ongoing trade tensions and US pressure on the European Union have further accelerated euro losses, while the Australian dollar benefits from stronger risk sentiment and a stable trade outlook in the region after pricing in all downsides in recent days.
Technical Analysis
EUR/AUD has established a firm downtrend on the four-hour chart following the completion of a double-top pattern. Sellers are now testing the 1.65880 support level, attempting to break below this key structure to extend the bearish momentum. If the breakout is confirmed, immediate downside targets are at 1.65651, followed by 1.65360 and 1.65038.
Momentum indicators confirm increasing bearish pressure. RSI is trending lower, nearing oversold territory, signaling stronger selling pressure. MACD remains negative, showing no signs of momentum reversal.
However, if buyers regain control, a corrective rally could emerge, leading to a retracement toward resistance at 1.66202. A break above 1.66722 would invalidate the bearish scenario, signaling a potential trend shift.
Key Technical Levels
- Resistance Levels: 1.66202, 1.66722
- Support Levels: 1.65651, 1.65360, 1.65038
Fundamental Factors Driving EUR/AUD
With trade tensions escalating, investor confidence in the euro remains weak, leading to further downside pressure on the currency.
The Australian dollar, in contrast, remains relatively stable, supported by strong trade flows. The upcoming Australian trade balance report, scheduled for Thursday, will be a key event for traders. If the trade surplus exceeds expectations, it could boost the AUD, further reinforcing the bearish trend in EUR/AUD.
Conclusion
EUR/AUD remains under sustained bearish pressure, with sellers targeting a break below 1.65880 to extend losses toward 1.65651 and beyond. A recovery above 1.66202 would signal a short-term correction, but the broader downtrend remains intact unless 1.66722 is breached.
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