• EUR/AUD strengthened on Friday as investors looked past a severe economic contraction in the euro zone.
• Euro zone economy recorded its deepest contraction on record in the second quarter while the bloc’s inflation unexpectedly ticked up in July.
• EUR/AUD bulls confidence is running high, a test of 1.6627 (38.2% fib) highly seems likely.
• From a technical viewpoint, RSI is strongly bullish at 60, daily momentum studies, 5, 10 and 11 daily MAs all climb.
• Immediate resistance is located at 1.6582 (200 DMA), any close above will push the pair towards 1.6627 (38.2% fib).
• Immediate support is seen at 1.6417 (23.6% fib) and break below could take the pair towards 1.6362 (9 DMA).
Recommendation: Good to buy on dips around 1.6500, with stop loss of 1.6330 and target price of 1.6600.
