- Draghi says growth outlook is better than expected.
- EURAUD makes three failed repeated attempts at the 1.5940 resistance.
The EUR/AUD is following the same path than most Euro forex pairs. After an initial boost after the Draghi announced that interest rates remain unchanged, the EUR/AUD tested the 1.5940 close to Wednesday’s high to abruptly reverse course.
In the press conference on Thursday, Draghi was initially hawkish, removing the option to extend the size of its monthly purchases.
Draghi then gave another boost to the Euro by saying that the growth outlook is actually better with a growth forecast of 2.4% in 2018 against 2.3% in the past.
However, he started to downplay the growth forecast change. Draghi said that it should be taken into context, that it is just a confirmation of the previous outlook and that the ECB is reactive and not proactive.
The EUR/AUD reached 1.5940 but then collapsed more than a 100 pips, looking now vulnerable to more downward pressure.
According to analysts, the hawkish shift will probably prevail over the downplaying of Draghi in the long term. The ECB is heading towards the end of the APP and a confirmation of the upbeat inflation outlook is a positive development. However, market participants were keen to sell the Euro on strength, which can lead to believing that investors where somewhat disappointed and where possibly expecting more from the ECB.
Technically, the EUR/AUD seems poised for a pullback lower after three repeated failures in the 1.5940 area. The first intraday level to watch is the 1.5817, S1 pivot and Monday’s low followed by the 1.5773, S2 pivot which was also an important level on March 1. The 1.5580-1.5900 area is likely to povide resistance with the 200-period simple moving average and the daily pivot. Further up, the next scaling point is seen at the 1.5940, R1 pivot and high of the day.