EUR/AUD macro view: Bullish weekly close
Since the EUR came into existence it traded pretty consistently against the AUD between 1.55 and 1.70, and then along came the GFC (see chart). EUR/AUD screamed higher above 2.00 when the big AUD carry trades were unwound in a hurry and then it collapsed back below 1.20 when the market thought the EUR was going out of existence. All seems pretty stupid now, but that’s what takes markets to extremes.
The break and close above weekly resistance at 1.4400 is a danger sign for the AUD as we could easily see this pair move higher towards longer-term median levels around 1.55. The bull trend seems to be in control and the main question is whether we go straight higher from here or whether we get more typical stop-climbing movements. I’m guessing that it will be more of the latter type as EUR/AUD is no longer in the severely oversold state that it was earlier this year.