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Support Zone Could Ignite a New EURAUD Rally
Central Bank
Economic
Summary:
This potential role reversal could be a bullish signal, suggesting that a new upward move may be developing from this area.
Buy
CLOSEDEURAUD
End Time
1.77383
Entry Price
1.78800
TP
1.76300
SL
1.77648 +0.00429 +0.24%
388
Points
Profit
1.76300
SL
1.77771
CLOSING
1.77383
Entry Price
1.78800
TP
Australia’s second-quarter inflation data, due early Wednesday, is expected to show further easing in price pressures, reinforcing expectations for an interest rate cut by the Reserve Bank of Australia (RBA) in August. Headline CPI is projected to rise by 0.8% quarter-on-quarter, slightly below the 0.9% increase recorded in Q1. On an annual basis, inflation is anticipated to ease to 2.2% from 2.4%, suggesting that the RBA may soon have more room to adjust its policy stance.
For the month of June, the monthly CPI is expected to remain unchanged at 2.1% year-over-year. Meanwhile, the RBA’s preferred measure of core inflation—the trimmed mean CPI—is forecast to hold steady at 0.7% on a quarterly basis, with the annual rate easing modestly to 2.7% from 2.9%. If these figures come in weaker than anticipated, they could solidify market expectations of a rate cut at the upcoming August 12 meeting. In fact, money markets are already pricing in nearly a 90% chance of a 25 basis point reduction.
However, a stronger-than-expected inflation print could delay the RBA’s decision, potentially giving the Australian Dollar a temporary lift as markets reassess the likelihood of imminent easing.
On the European front, the latest Monthly Consumer Expectations Survey from the European Central Bank revealed that inflation in the euro area is expected to continue trending lower over the coming year.
In global developments, a newly announced trade agreement between Donald Trump and European Commission President Ursula von der Leyen could have far-reaching implications. Under the deal, the U.S. will impose a flat 15% tariff on a broad range of EU exports, including cars, machinery, and consumer goods—a significant increase from the 2024 average tariff rate of just 1.2%.
In return, the European Union has agreed to purchase $750 billion worth of U.S. liquefied natural gas (LNG) over the next three years and to channel $600 billion in private investment into key U.S. sectors such as energy, defense, and manufacturing. According to EU Trade Commissioner Maroš Šefčovič and officials cited by Politico, the European Commission itself will play no direct role in raising the $600 billion, as the capital is expected to come exclusively from private firms.
Technical Analysis
EURAUD recently dipped toward the 1.7705 level, a price that previously acted as resistance and may now be transforming into support. This potential role reversal could be a bullish signal, suggesting that a new upward move may be developing from this area. The pullback follows the pair's climb to a local high of 1.8096 on July 6. While the overall trend remains tilted to the downside, the Relative Strength Index (RSI) is now sitting at 36—approaching oversold territory—which may invite renewed buying interest and help ease the selling pressure.
Initial upside targets lie at 1.7813, followed by the 1.7886 level, should momentum build. Meanwhile, the 100- and 200-period moving averages—currently at 1.7854 and 1.7832, respectively—are converging. A bearish crossover between the two could confirm a continuation of the broader downtrend. However, if the price manages to rebound from current levels, it might not only avoid the crossover but also reapproach the moving averages, in line with the tendency of prices to return to key mean levels over time.
Trading Recommendations
Trading direction: Buy
Entry price: 1.7735
Target price: 1.7880
Stop loss: 1.7630
Validity: Aug 08, 2025 15:00:00
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