The EURAUD pair was higher after the European Central Bank kept its stimulus plan unchanged. Speculation grew that the bank were unhappy with the two-year highs in the Euro and may attempt to bring the currency back down with another stimulus announcement being an option to see some selling in the single currency.
The European economy has recovered but virus cases are rising again and the stronger euro could add weight to EU inflation, which was already negative in the latest print. Economists still expect the central bank to increase and extend bond purchases later in the year.
ECB President Christine Lagarde will now hold a press conference at 14:30 CET to discuss the bank’s recent decisions and to give their latest projections for output and inflation. Questions will likely be pitched on the Euro currency’s strength, which unexpectedly gained 10% versus the U.S. dollar and now sits at 0.9100 versus the British Pound.
Traders will also want to know how long the ECB expects to utilize the pandemic bond-buying program, and whether it will be expanded. Officials have suggested that its duration should be limited, however, the program is scheduled to run into June 2021 and economists believe this will be extended by six months.
EURAUD Technical Outlook
The EURAUD pair was trying to rally back into the price channel that market an uptrend from the lows in June. Resistance lies at 1.6350 with a potential for a 300 pip move to the channel resistance. A close back near the 1.6200 would signal further losses ahead. Investing Cube Trading Course is now available for traders new to technical analysis and risk management.
EURAUD Daily Chart