EUR/AUD Signals & Technical Analysis
About the EUR/AUD (EURO & AUSTRALIAN DOLLAR)
The EUR/AUD pair is the abbreviated term used for the Euro & Australian dollar. This currency pairing is most impacted by any change in the price of gold, this pair doesn't have a nickname.
Before we get into the particulars, what exactly does the EUR/AUD rate mean? The exchange rate tells you how many EURO (the quote currency) are required to purchase one Australian dollar (base currency). For example, if the pair is trading at 0.63, it means it takes 0.63 euros to buy 1 Australian Dollar.`
Breaking Down ‘EUR/AUD’
The euro (€; EUR) is the official currency of 19 of the 28 member states of the European Union. The euro is the second largest and second most traded currency in the foreign exchange market after the United States dollar. The euro is divided into 100 cents.
The Australian dollar is known as a commodity currency due to the role of Australia in global gold production and export. Aussie exhibits a long-term positive correlation with the value of gold.
This pair is considered to be a great barometer for global risk. In 2012, while the European sovereign debt crisis the EUR/AUD reached its low level. Since then, due to the European Central Bank’s policy of Outright Monetary Transactions (OTM or the “whatever it takes” measure ), the set has improved considerably.
What Determines the EUR/AUD Exchange Rate?
Several factors can impact the EUR/AUD rate valuation, including
ECB & RBA Monetary Policies The bank of the European Central Bank and Reserve Bank of Australia control the supply of money in the market, to keep the economy on track. A dovish policy, which is also known as expansionary policy, from either of the central banks, weakens the related currency. In contrast, a hawkish monetary policy (contractionary policy) strengthens the currency.
Correlation is merely a mutual relationship or connection between two or more things.
Positive Correlation – The positive relationship merely is when pairs move in tandem with each other.
In the forex world, The EUR/AUD, GBP/AUD, EUR/AUD, AUD/SGD and EUR/AUD, XPD/USD currency pairs are positively correlated. It's because all these pairs have an Australian dollar in the numerator. So, any change in the Aussie will be reflected in these pairs.
Negative Correlation – In contrast, a negative relationship is when forex pairs move in the opposite direction. For example, AUD/SGD, EUR/HUF, and. AUD/NZD
Gold & Aussie: One essential characteristic of the AUD is that it has a high positive correlation with gold prices. The reason behind this is that Australia is the third biggest gold producer in the world. As a result, whenever the price of gold rises or falls
The euro is one of the most important alternatives to the U.S. dollar among fiat currencies. This is why there is often a positive link between the euro and gold: both assets are negatively correlated with the greenback. However, This is because gold is not merely an alternative against the U.S. dollar, but also against the current monetary system based on fiat currencies. Therefore, in some cases the euro and the dollar both lose (or gain) ground against gold.
Economic Events: The movement in the European and Australian economic events determine the exchange rates. Top of the line economic events includes GDP Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Euro & Australian Dollar, causing fluctuations in the EUR/AUD exchange rate.
Major Economic Events:
Gross Domestic Product – the Gross domestic product is the central measure of economic growth in the region.
Employment Change – The Euro is also sensitive to changes in employment, particularly in the Eurozone’s largest economies like Germany and France.
Employment Change – The Australian Dollar is sensitive to changes in employment, as slacks in the labor market cause a drop in Inflation rates.
Standard lot Size: 100,000
Mini lot size: 10,000
Price minimum increment: 0.00001
Pip Value: $7.49