EUR/AUD Bearishness Likely to Continue Despite Decreasing House Prices in Australia

Australia – House Price Index

Yesterday, at GMT 2:30 a.m., the Australian Bureau of Statistics released the House Price Index (HPI), which measures the changes in the selling price of houses in the 8 state capitals in Australia.

Since rising house prices indicate that investors are confident about purchasing houses and vice-versa, it can binary options traders consider the HPI to be a leading indicator of investor confidence in the country. The HPI is usually released every three months in a quarter-over-quarter format.

Last month, the Australian HPI suggested that house prices in Australia’s 8 state capitals have increased by 0.2% and the forecast for this month was set at an additional increase of 0.8%. However, the actual figure came out much lower than what the market was expecting, at -0.2% decrease.

Eurozone – German ZEW Economic Sentiment

Today, at GMT 10:00 a.m., the Zentrum fur Europaische Wirtschaftsforschung (ZEW) will release its German economic sentiment index, which measures the level of a diffusion index based on surveying 275 German institutional investors and market analysts.

Since the professional investment community, investors and analysts have the latest data; their reflection about the economy tends to be the most accurate. Therefore, binary options investors consider the ZEW’s German economic sentiment index to be a leading indicator of the entire Eurozone economy. This is because the German economy is one the most important driving forces behind the Euro currency.

Last month, the ZEW German economic sentiment came out at 6.4, and this month the forecast is set at a slightly lower level, at 5.1.

Trade Recommendation for the EUR/AUD

EURAUDDaily

During April 2016, the EUR/AUD remained very bullish and the price closed above the important psychological pivot zone around 1.5500. However, on June 7, the EUR/AUD price broke below the uptrend line and fell towards the support level around 1.5185, which kept the price from falling further over the last two weeks.

Although the EUR/AUD penetrated the 1.5185 level several times over the past two weeks, the daily bar has failed to close below this level, indicating a strong support level around this pivot zone.

As the Australian HPI came out negative and the German ZEW economic sentiment is expected to drop this month, the fundamental outlook for the EUR/AUD would likely remain bullish this week. But, if the EUR/AUD price closes below last week’s low, it may attract additional bearish momentum in the market and present traders with an opportunity to short the pair.

Under the circumstances, it would be recommended that binary options traders consider placing a PUT order for the EUR/AUD with their binary options brokers as soon as the price penetrates and closes below the 1.5130 level, which is last week’s low.

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Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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