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
EUR/AUD - FAQs
The EUR/AUD currency pair is a particularly interesting combination due to the geographical, economical and political ties between these two regions. The Australian economy is highly dependent on commodities so it has historically been affected by fluctuations in global growth and economic cycles. This means that when economic conditions are favourable for one region, there will be less reliance on commodities from the other region. This makes EUR/AUD an attractive pair trading opportunity because of its natural hedging properties against a global event or economic cycle. In addition, both currencies have relatively low correlations against other established pairs like EUR/USD which adds to its attractiveness for those looking for pure currency plays rather than a commodity or stock-specific investments. Overall, EUR/AUD is a great pair trading option given its widely traded nature and lack of correlation with major currency pairs making it an attractive choice for investors seeking diversification opportunities in their portfolio.
At the present moment, EUR/AUD is in a bearish trend. This means that the value of the Euro (EUR) is decreasing relative to the Australian Dollar (AUD). The current exchange rate for EUR/AUD stands at 1.6133 making it more expensive to buy one Euro with Australian Dollars compared to recent trends. If the trend continues and remains in bearish territory, this indicates that the Australian Dollar is getting stronger relative to its European counterpart.
Yes, EUR has been getting stronger against AUD in recent months. The most recent data shows that the exchange rate between 1 Euro and 1 Australian Dollar is currently around 0.63, with EUR having risen over 8% since September 2019. This makes sense considering that the Eurozone economy as a whole is doing better than Australia's at this time, mainly due to its stronger fiscal position and higher levels of public spending.
The exchange rate between the Euro (EUR) and the Australian Dollar (AUD) is affected by a variety of factors. These include economic indicators from both the European Union and Australia, such as interest rates, inflation levels, government policies, geopolitical events, and sentiment in global markets. Additionally, the perception of each currency relative to other currencies can influence EUR/AUD exchange rates. Other market forces influencing EUR/AUD are speculation and trading activity on Forex markets among traders who speculate on whether a particular currency will rise or fall in value based on current news and trends. Supply and demand of each respective currency also influence the exchange rate between them. Finally, natural disasters or unexpected major events can cause shifts in various currencies' values instantly as people flee to safer investments during times of uncertainty.