Aussie Tailwinds Reaffirm Bearish Case as EUR/AUD and GBP/AUD Compress Within Descending Triangles

The EUR/AUD and GBP/AUD pairs are currently compressing within bearish descending triangles, suggesting a potential resumption of their downtrends from last year's highs. This technical analysis is supported by macro forces favoring the Australian dollar against European currencies.

Relative rates have had an inverse relationship with both pairs over 10- and 20-day windows, while industrial metals strength has shown strong inverse relationships, particularly in the 10-day window. This combination points to continued Aussie dollar strength relative to European crosses.

The EUR/AUD pair is currently testing downside support at 1.6090 within a descending triangle structure dating back to August. A clean break below this level could lead to targets of 1.5968 and 1.5850, while a breakout through the upper side of the triangle would suggest a potential bounce towards 1.6260.

The GBP/AUD pair is also testing support within its own descending triangle structure at 1.8752, with multiple downside wicks having failed to break below this level previously. If 1.8696 were to be broken cleanly, there's not much technical support evident until the swing low set in May at 1.8540.