Despite Spanish GDP shrinking for the 6 consecutive quarter, EUR continued to rally with EUR/USD holding onto key 1.35 handle with seemingly no sweat. The strength in this bloc currency allowed EUR/AUD to finally push above 2012 highs after successfully defending 1.29 earlier this week.
Price is peeking above 1.303 – the support found back in 2011, opening up the trading range of 2011 as possible targets for bulls. With this rally, we are looking at potentially new bullish reversal in EUR/AUD which has fell from 2.51 since 2008 to current levels. Bearish momentum was already broken with the rally back in the 1st week of October 2012, with a retest of the declining trendline confirming bullish intent. Though price has been steadily increasing, bulls were living under the shadows of 1.29 as the greater bearish trend remains without new highs being formed. Breaking above 1.303 is a vote of confidence and a confirmation of the breakout from 1.29, though bears will be hoping that structural support around 1.328 will provide more resistance against a move higher
Nothing much from Hourly Chart other than telling us that short-term momentum is on the bullish side. Stochastic readings has just broke below 80.0 after staying in the Overbought region after an extended period of time (relatively speaking). However, instead of forming a top, price actually went on to push higher, underlying the inherent bullishness of this currency pair.
Fundamentally, EUR/AUD is also a “Risk” currency, with higher risk appetite favoring AUD more – see 2 candles before Jan 31st, where price rallied following dismal US GDP data. Any further negative economic news will add wind to bullish sails and accelerate gains towards 2011 highs.
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