EUR/AUD Price Action Signals Bullishness as the RBA Likely to Keep Cash Rate at 1.5%

Australia – Cash Rate

On Tuesday, at GMT 3:30 a.m., the Reserve Bank of Australia (RBA) will release the official cash rate. It is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.

Short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies. So, binary options traders pay close attention to any changes in the official cash rate.

The RBA left the cash rate at 1.5% in their last meeting. The forecast for this month is that the RBA will leave the cash rate unchanged at 1.5% for the time being.

Eurozone – Final Services PMI

On Tuesday, at GMT 9:00 a.m., the Markit will release Eurozone’s final services purchasing managers’ index (PMI) figure. It measures the level of a diffusion index by surveying around 600 purchasing managers in the country.

Businesses are the first to react to changing economic climate. The Final Services PMI is calculated based on survey questions covering employment, production, price levels, new orders situation. Also, it is based inventory conditions. Hence, binary options investors consider this data to be a leading indicator of the overall economic health of the country.

Last month, the Eurozone’s Final Services PMI reading came out at 53.3. The forecast for this month is currently set at a reading of 53.3 as well.

EUR/AUD Forecast

The EUR/AUD remained highly bullish since the start of June 2018. After reaching the resistance near 1.6350, it formed a double top pattern and started a bearish retracement. Over the last three weeks, the EUR/AUD fell by around 600 pips and broke below the pivot zone around 1.5870. However, on November 2, it formed a bullish pin bar and over the last few days, the pair remained mostly range bound.

The Australian cash rate will likely not change this week and it may remain steady at 1.5% once again. On the other hand, analysts are expecting the Eurozone Final Services PMI to come out at 53.3, same as last month. As the market fundamentals will likely not going to render any directional movement, it will largely depend on the price action. Given the latest pin bar, we believe it would set a bullish fundamental outlook for the EUR/AUD this week. Therefore, if the EUR/AUD closes above the resistance near 1.5870, it would likely attract additional bullish momentum in the market.

Hence, Australian binary options traders should look out for trading opportunities above this major resistance level around 1.5870.

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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