EUR/AUD Forex Signal from Rate Decisions – July 1, 2014

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EUR/AUD Forex Signal from Rate Decisions - July 1, 2014

EUR/AUD Forex Signal from Rate Decisions - July 1, 2014

The downtrend of EUR/AUD is still intact, as the pair is trading below a falling trend line on its 4-hour time frame, giving a sell forex signal. However, the upcoming events this week could be crucial in determining whether this trend will carry on or not.

Price is testing the 38.2% Fibonacci retracement level, which is around the 1.4550 minor psychological handle. Stochastic is already in the overbought zone, indicating a forex signal that sellers could jump in sooner or later.

The RBA will announce its interest rate decision today and possibly determine the longer-term direction of the AUD. Hawkish remarks could lead to an Aussie rally while downbeat cautious comments might lead to a selloff. Later on, the ECB will announce its policy decision but no changes are expected for now. Selling at 1.4550 with a stop above the 1.4600 mark and a target of new lows could yield a good return on risk if the economic events turn out in favor of a selloff.

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Forex Signal and Forecast

Recall that ECB Governor Draghi and his group of policymakers decided to ease in their latest monetary policy statement. At that time they cut the benchmark rate, marginal lending rate, and deposit rate in order to encourage more lending activity. At the same time, they set the stage for targeted LTRO in September and December while extending maturity dates for collateral to be used in potential asset purchases.

The RBA, on the other hand, chose to be a little more optimistic in their previous statement. While there were some downturns in some economic sectors, Governor Stevens highlighted the improvements in hiring and housing. Since then, China has shown signs of a rebound in its manufacturing sector which might be good for Australia’s exports and economy.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.