EUR/AUD, GBP/AUD Bearish Technical Case Amid Aussie Strength
The EUR/AUD and GBP/AUD currency pairs are facing a bearish technical case, with both compressing within descending triangles. These triangles are considered a bearish continuation pattern that suggests the downtrend from last year's highs may resume.
The macro forces driving the Aussie dollar's strength include relative rates, risk appetite, and industrial metals. The analysis shows that recent correlations indicate these factors have been more influential than energy movements in determining the Aussie's value.
The chart below illustrates the inverse relationships between the Eurozone (proxied by Germany), S&P 500 futures (proxy for broader risk appetite), and the Australian dollar against both EUR/AUD and GBP/AUD. This suggests that continued Aussie strength is likely to put pressure on these pairs, potentially leading to downside targets of 1.5968 and 1.5850 for EUR/AUD.
The technical picture for GBP/AUD is similar, with the pair testing support at 1.8752 within a descending triangle structure. A clean break below this level could lead to further declines, targeting the swing low set in May at 1.8540 and 1.8500, the June 2023 swing low.