Australian Dollar continuously gains against Euro

The EUR made an all time low of 1.4802 against the Aussie Dollar making the Aussie dollar stronger. This was due to the Greece debt worries which have been around for past 2 months now making the EUR weaker. Despite Greece’s efforts to reduce the debt through issuing bonds (which were oversubscribed), investors were not appeased much. The debt concerns of Greece and slow recovery of the US have resulted in the investors choosing Australian dollar over a period now. Also the Australian economy has been with some close ties with China which is major consumer of its mining actives. The monthly NAB Business Confidence Index has also made an impressive comeback boosting the AUD (19 published vs. 15 expected). Last week’s Reserve Bank of Australia (RBA) decision to increase the overnight cash rate by 25 bps has also made AUD an attractive destination for carry trade. The economy’s unemployment rate was in line with the forecast at 5.3% but slightly higher than the January’s rate which was 5.2%.

From the technical point of view, the near term support would be at 1.4923 and next support at 1.4875. The resistance would be at 1.5042 and next resistance at 1.5109. Investors should watch out for AUD monetary policy meeting and the Germany’s economic ZEW Sentiment data release (March 16) which could affect the pair. However from the trend perspective, the EUR continues to remain bearish against the Australian dollar.

Mohammed Rabbani