EURAUD Breakdown: Bearish Continuation Ahead of ECBEURAUD is showing signs of renewed downside pressure as fundamental and technical forces align in favor of Australian dollar strength. With the European Central Bank expected to hold rates steady and provide a cautious growth outlook, the euro remains vulnerable. Meanwhile, upside surprises in Australian inflation and supportive commodity dynamics continue to boost AUD sentiment. Technically, the pair has broken down from a rising wedge, confirming bearish momentum and setting the stage for further declines toward key support near 1.7648 and potentially 1.7500.
🟢 Current Bias: Bearish
🔑 Key Fundamentals:
ECB: Markets expect the ECB to hold rates steady this week. While this ends a 7-year streak of cuts, the bank has turned cautiously neutral, with no clear signal of future tightening. Core inflation remains subdued, and growth momentum across Germany and the euro area is weak.
RBA & Australia: The RBA faces persistent inflation risks after the June CPI surprised to the upside, putting rate hikes back on the table. The Aussie dollar is drawing strength from this, especially with rising commodity prices and China's potential fiscal stimulus aiding demand-side confidence.
Macro Divergence: Australia’s macro picture is improving vs. the eurozone. AUD has tailwinds; EUR is under pressure from stagnant growth and tepid inflation outlook.
⚠️ Risks to Bias:
ECB Surprise: A sudden hawkish tone from the ECB (e.g., lifting forecasts or emphasizing wage-driven inflation risk) could spark short-term EUR upside.
RBA Softness: A dovish RBA pivot or weak Aussie data could weaken AUD strength and slow EURAUD downside.
Geopolitical Risk: Broader global volatility (e.g., US-China, oil disruptions) could cause flows into euro as a semi-safe haven.
📅 Key News/Events to Watch:
ECB Rate Decision & Press Conference – July 25
Eurozone Flash GDP + CPI – Next week
China industrial data (AUD-sensitive)
RBA August Meeting Statement (early Aug)
📉 Technical Breakdown (4H Chart):
Price broke bearish from a wedge consolidation.
Minor bullish pullbacks are being sold into, confirming a distribution phase.
Targets:
1st Target: 1.76480 (support & fib confluence)
2nd Target: 1.7500–1.7460 zone (major swing low)
Resistance: 1.7855–1.7975 zone is key invalidation area.
Structure favors lower highs & continuation patterns until support zones break.
🧭 Leader/Lagger Behavior:
AUD is leading the move. Strong CPI and China demand backdrop are fueling bullish AUD momentum.
EUR is lagging, tracking broader USD risk tone and internal Eurozone data weakness.
EURAUD is currently reactive to external forces rather than setting direction for other pairs.
✅ Summary: Bias and Watchpoints
Bias: Bearish
Fundamentals: Weak Eurozone growth vs. hotter Aussie inflation and hawkish RBA tone.
Risk: ECB hawkish tilt or a dovish shift from the RBA.
Event to Watch: ECB press conference and Aussie CPI commentary from policymakers.
Leader/Lagger: Lagger — following AUD strength rather than leading.
