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A Fresh Bullish Wave May Be Brewing from the Pullback
Forex
Central Bank
Summary:
Despite this pullback, the pair has been unable to establish new lows, indicating that selling momentum may be waning.
Buy
CLOSEDEURAUD
End Time
1.78666
Entry Price
1.84200
TP
1.73500
SL
1.75561 +0.00124 +0.07%
72
Points
Profit
1.73500
SL
1.78738
CLOSING
1.78666
Entry Price
1.84200
TP
The minutes from the Reserve Bank of Australia's (RBA) March 31–April 1 meeting reflected ongoing uncertainty about the timing of the next interest rate adjustment. While the Board viewed the upcoming May meeting as a logical juncture to reassess monetary policy, officials were careful to emphasize that no decisions had been made in advance. The statement noted that both upside and downside risks remain in play for the Australian economy and the inflation trajectory, suggesting that policy decisions will remain finely balanced in the months ahead.
Labor market figures also offered a mixed view. Australia’s unemployment rate inched up to 4.1% in March, slightly better than market expectations of 4.2%, yet still indicative of some slack in the job market. Meanwhile, the change in employment came in at 32.2K, falling short of the 40K consensus forecast, signaling a possible cooling in hiring momentum.
Adding to the cautious tone, the Westpac Leading Index, which provides insight into the likely direction of economic growth over the next three to nine months, slowed to 0.6% in March, down from 0.9% in February. This deceleration highlights the fragile nature of Australia’s current economic outlook and reinforces the RBA’s measured approach.
At the same time, the European Central Bank (ECB) has now carried out six straight rate cuts—marking its seventh since beginning its easing cycle last June. With eurozone inflation gradually trending toward the ECB’s 2% target, market participants have increasingly anticipated further policy accommodation. Concerns about external shocks and a weakening global economy have only strengthened the case for continued monetary stimulus.
In its latest statement, the ECB acknowledged that disinflation remains well on track, but stopped short of committing to a predetermined interest rate path. Instead, the central bank reaffirmed its cautious, data-driven stance, committing to a meeting-by-meeting evaluation amid what it described as “exceptional uncertainty.” This uncertainty, according to ECB officials, is closely tied to former U.S. President Donald Trump’s shifting trade policies.
ECB President Christine Lagarde added during her press conference that rising global trade tensions are likely to drag on eurozone growth by hampering exports—one of the bloc’s most important economic drivers. Her remarks signaled an elevated level of concern regarding the region’s vulnerability to global headwinds.
Additional insight came from Governing Council member François Villeroy de Galhau, who noted that inflationary risks linked to trade disputes appear limited and may even lean to the downside. Meanwhile, fellow ECB policymaker Madis Müller explained that the latest 25-basis-point rate cut was primarily driven by falling energy costs and increasing tariff pressure. Müller emphasized that interest rates no longer pose a drag on eurozone activity and observed that key economic indicators are gradually moving in a more favorable direction. However, he cautioned that a more fragmented global economy could still add upward pressure on prices over time.
Technical Analysis
EURAUD peaked at a local high of 1.8557 on April 9 before entering a corrective phase that found a floor around 1.7384. Despite this pullback, the pair has been unable to establish new lows, indicating that selling momentum may be waning. This opens the door for a potential bullish rebound, especially as the price is now testing the 100-period moving average, which sits near 1.7748 on the 4-hour chart. The pair has previously found upward momentum from this dynamic support level, and if the zone continues to hold over the coming sessions, we could see another leg higher toward 1.8427.
The Relative Strength Index (RSI) recently dipped to a local low of 39. While this is not technically in oversold territory, it’s worth noting that during strong uptrends—like the one EURAUD experienced recently—RSI often reverses from higher levels. This suggests that bullish momentum could resume at any moment.
Should the pair break below the 100-period moving average, however, attention will shift to the 200-period moving average, which aligns closely with key support around 1.7384. This would mark the next important area for a potential bullish defense or a deeper retracement if breached.
Trading Recommendations
Trading direction: Buy
Entry price: 1.7867
Target price: 1.8420
Stop loss: 1.7350
Validity: Apr 28, 2025 15:00:00
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