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Tight Range in the Bullish Wedge Could Offer Buying Opportunities
Forex
Economic
Summary:
This convergence indicates that the local average price resides in this region, suggesting these moving averages could act as a magnet to pull price back higher toward the 1.6355 area.
Buy
PENDINGEURAUD
EXP
1.60700
Entry Price
1.63550
TP
1.59650
SL
1.60983 -0.00050 -0.03%
--
Point
PENDING
1.59650
SL
CLOSING
1.60700
Entry Price
1.63550
TP
Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter noted on Tuesday that the housing market represents a key transmission mechanism for monetary policy. Hunter added that the central bank aims to cool both the housing sector and the broader economy to relieve inflationary pressures.
Australia's Trimmed Mean CPI held at 3.6% year-over-year in July, exceeding the RBA's year-end forecast of 3.3%. Simultaneously, real GDP growth reached 2.1% year-over-year in the second quarter, topping the central bank's 1.9% estimate. This data continues to support expectations of a 25-basis-point rate hike to 4.60% at the September 29 meeting, a scenario to which markets currently assign roughly a 70% probability.
The Australian economy grew 0.4% quarter-over-quarter during the second quarter, slightly beating forecasts, according to data released by the Australian Bureau of Statistics (ABS). This outcome further strengthens the case for an interest rate increase in the near term.
Following the GDP release, traders raised the implied probability of an RBA rate hike in September to near 70%, up from approximately 50% prior to the report, according to Bloomberg analysis of futures markets.
In Europe, energy markets remain a key focus due to the sharp rise in natural gas prices. Dutch natural gas futures reached nearly three-year highs, rising up to 3.4% to trade near 75 euros per megawatt-hour—roughly 128% above levels recorded a year ago. Additionally, European gas storage stands near 67% capacity, significantly below the seasonal average of 83%, with less than a month remaining before the start of the heating season.
The situation has been compounded by ongoing disruptions across energy supply routes. The Strait of Hormuz has remained closed since late February, while Qatar extended force majeure on shipments destined for Europe and Asia into the autumn, heightening uncertainty over regional energy supplies.
Against this backdrop, the European Central Bank (ECB) is widely expected to raise its deposit rate from 2.25% to 2.50% and increase the main refinancing rate to 2.65% at its Thursday meeting. Although this move is largely priced in by markets, investors will focus closely on remarks from President Christine Lagarde and the central bank's updated economic projections for signals regarding the future path of monetary policy.
Eurozone inflation accelerated to 3.3% year-over-year in August, up from 2.9% in July, driven primarily by higher energy costs. Consequently, the euro's reaction may depend less on the rate decision itself and more on whether the ECB hints at further rate hikes beyond September or begins laying the groundwork for a pause in its monetary tightening cycle.
Technical Analysis
EURAUD is currently trading within a falling wedge formation that is rapidly approaching its lower boundary. This area could offer buying opportunities if price action tests the 1.6074 level and rebounds upward. Such a bounce could drive price toward the descending trendline, which is currently followed by both the 100-period and 200-period moving averages, both aligned at 1.6332. This convergence indicates that the local average price resides in this region, suggesting these moving averages could act as a magnet to pull price back higher toward the 1.6355 area, where key local resistance is also situated.
Turning to the oscillators, the RSI sits at 30, placing it in oversold territory and suggesting a bullish reaction could materialize near current levels. Meanwhile, the MACD shows that the bearish histogram has lost virtually all depth, making an upward crossover appear imminent as the lines compress tightly. Although the signal lines remain inside negative territory, a bullish crossover would align technical factors to support a sustained upward move; conversely, a breakout below the wedge would open the path to further downside.
Trading Recommendations
Trading direction: Buy
Entry price: 1.6070
Target price: 1.6355
Stop loss: 1.5965
Validity: Sep 21, 2026 15:00:00
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