Aussie Strength Reignites Bearish Technical Case for EUR/AUD and GBP/AUD
The EUR/AUD and GBP/AUD currency pairs are forming bearish technical patterns. They're compressing within descending triangles, which suggests a resumption of the downtrend from last year's highs.
Research indicates that the Aussie's strength is being driven by relative rates, risk appetite, and industrial metals rather than energy markets. This is evident in the inverse relationships between the pairs and Germany's benchmark rate as well as S&P 500 futures.
The Eurozone's interest rates have a mildly inverse relationship with both pairs over 10- and 20-day windows. Meanwhile, Australia's status as an energy and commodity powerhouse is providing tailwinds to its currency.
For EUR/AUD, the price is testing support at 1.6090 within a descending triangle structure dating back to August. A clean break beneath this level could lead to downside targets of 1.5968 and 1.5850. In contrast, a breakout above the upper side of the triangle would suggest a bounce towards the confluence of the 50-day moving average and former support at 1.6260.