Analysis of the Euro - Australian Dollar exchange rate

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If you are a Forex investor who is interested in currencies where the Euro is the base currency, then the EUR/AUD cross is a currency pair you should know about. In this article, we propose you to discover what are the most important elements and information to know before starting to make relevant analysis. In this article, we will present you in more detail this cross and its specificities as well as the methods of fundamental and technical analysis of its price.  

Analysis N°1

The interest rates set by the central banks of these two zones, namely the ECB and the RBA, and their press conferences.

Analysis N°2

Figures for the unemployment rate, trade balance, inflation, GDP growth, retail sales, durable goods and industrial orders, business sentiment and consumer confidence.

Analysis N°3

The political and economic news of these two countries.

Analysis N°4

The balance between imports and exports.

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General presentation and functioning of EUR/AUD :

As the name suggests, the EUR/AUD represents the parity between the euro and the Australian dollar. More clearly, this means that this cross gives the exchange rate of the euro to Australian dollars and therefore expresses the value of one euro in Australian dollars.

The EUR/AUD is of course used in international trade between Australia and the Eurozone but is also used as a speculative asset in the foreign exchange market.

The exchange rate between the euro and the Australian dollar is quoted on the foreign exchange market and is highly volatile during the opening hours of the European and Australian financial markets, i.e. from 3.30 pm to 10 pm (Paris time) and from 1 am to 7 am (Paris time).

Between 4:30 pm and 10 pm, volatility is high because this period corresponds to the first hours of trading on the American stock market and the end of the European session. Investors are therefore numerous on the market and trading volumes are high.

As for the Australian stock exchange, based in Sydney, it is open during part of the French night like the Tokyo Stock Exchange. The trading volumes on the Australian dollar, the yen or the New Zealand dollar are indeed very high.

Of course, in the foreign exchange market, it is possible to take positions on this currency pair as well as on other currencies at any time, not only during the opening hours of these financial markets.

As we will see later, the price of this EUR/AUD currency pair is a function of supply and demand and therefore can be influenced by certain external factors or market psychology.

 

How to perform a technical analysis of the Euro - Australian Dollar :

First, we will focus here on an analysis dear to investors on the Forex, namely the technical analysis. This analysis allows us to study the price of this value and its evolution in the more or less long term in order to predict as best as possible its future variations.

Technical analysis uses the charts of this parity with different time units depending on the strategy adopted and the trading horizon targeted by it. We will therefore favour here the most innovative charts offering a great possibility of customization.

Among the most frequently used indicators for EUR/AUD trading are moving averages and other popular indicators.

Moving averages are used in an attempt to determine the direction of the trend of the Australian Euro Dollar. To do this, analysts study the slope of the moving average which shows more or less responsiveness to the closing price above or below this indicator.

Other indicators that are frequently used in Forex trading and are therefore also suitable for trading the Euro - Australian Dollar include strategic reversal or acceleration points such as pivot points, support levels and resistance levels.

Other technical indicators are also worth looking at, such as Bollinger Bands, Fibonacci lines, MACD and RSI. They help determine the volatility of a market, the strength and direction of a trend and other important elements.

Frequently Asked Questions

What is the RBA's rate policy for the Australian dollar?

The RBA does not really have a specific policy regarding the Australian dollar interest rate, but the rate is an intermediate target for monetary policy and can be changed to achieve the overall objectives of monetary stability and sustainable economic growth. The RBA therefore makes regular rate change announcements for the purpose of market transparency and to stabilise its economy.

How to buy and sell the Euro and the Australian Dollar?

It is not possible to buy or sell the euro or the Australian dollar directly, but it is possible, with online Forex brokers, to take a position on the rate of this currency pair and thus to speculate on the upward or downward development of the exchange rate of this cross. This is because it is this exchange rate that is the basis for speculation in Forex.

How to choose an intermediary to invest in EUR/AUD?

If you want to invest in the EUR/AUD rate, you will have to use a trading platform provided by a CFD broker. It is therefore necessary to choose this intermediary carefully by comparing its technical specifications or the spread applied to this currency pair which can be fixed or variable.

72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. This is an advert for trading CFDs on Plus500