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Euro has taken support of rising trend line against Aussie, which has been in place since late April this year and over that Euro has gained from 1.368 against Aussie to 1.573 as of now. Euro however made a high around 1.657 against Aussie on August 24th and falling back and struggling since then.
Yesterday however, there has been solid rise in the pair from rising trend line, as Euro rose to just short of three day high, gaining close to 300 pips. The rise in the pair came in the back of sharp drop in Aussie as Chinese imports weaken by 17.7% y/y in September and Australia is major exporter of commodities to Chinese economy.
Euro on the other hand gained through inflow as it holds better growth prospect in the world along with its large trading surplus.
The pair is expected to rise further in the near term.
However, over the longer run focus for the pair will be on actions of European Central Bank (ECB), which is most likely to increase its pace of purchase late this year or by first quarter next year.
Trade idea -
- Long - Buy Euro against Aussie at current rate (1.568) and at dips below with target around 1.62 area and stop loss around 1.54 area. Stop - 270 pips and target - 530 pips
- Short - Sell Euro against Aussie for longer term and with more QE from ECB in focus around 1.62 area or at the break of trend line around 1.54 area targeting 1.475 area and with 1.66 area as stop loss. Stop - 400 pips and target - 1450 pips.
