What falls quickly is also likely to rise quickly and that has been the case with EUR/AUD. This used to be the world’s most reliable currency pair, stuck in a rut between 1.55/1.60 until the GFC hit and it went roaring up to 2.00. Then we entered the EZ debt crisis and this pair fell to 1.16, quite a move from a standing start! So where to next? My best guess at this stage is that we go higher, up to 1.30 and possibly 1.33. In the greater scheme of things, even 1.33 is pretty low for this pair.

  • The RBA is bearish on China with probably good cause:
  • The market is still short EUR, albeit at reduced levels:
  • If risk aversion returns in force, this pair will usually move swiftly higher.