EUR/AUD, GBP/AUD Trapped in Descending Triangles as Aussie Strength Continues
The EUR/AUD and GBP/AUD currency pairs are currently trapped within descending triangles on their charts, indicating a bearish continuation pattern that may signal the resumption of a broader downtrend from last year's highs.
According to FOREX.com, recent analysis suggests that relative rates, risk appetite, and strength in industrial metals have been fueling the Australian dollar's (Aussie) strength against its European counterparts. In fact, data shows that movements in energy markets have not had a direct impact on the Aussie's performance.
The chart below illustrates this phenomenon, where the relative rates between Germany (as a proxy for the Eurozone), S&P 500 futures, and Australia show inverse relationships with both pairs over 10- and 20-day windows. The strength of industrial metals is also evident in its strong inverse relationship with the Aussie.
This combination of macro factors suggests continued Aussie dollar strength relative to European crosses, adding weight to the case for renewed downside in EUR/AUD and GBP/AUD. For both pairs, a breakdown through support levels may lead to further declines, targeting significant lows from last year.