EUR: ECB tapering their bond buying, and end of now in sight and signalled to the market by Mario Draghi in last meeting.
EUR: recovering from losses from Italian political tensions in November (Italian Budget concerns now no longer a concern)
EUR: Any good or semi-good data will be supportinve of EUR
AUD: Stockmarkets still in decline and AUD is a risk averse currency
AUD: RBA signalling to the market that an interest rate hike is further away and no intention to raise rates in near future
AUD: Sensitive to USA-China trade war and any stale mate on negotiations would weigh on the AUD
TECHNICALS: EURAUD created a new floor at 1.6050 a touch or bounce off that area would signal a bias. The 1.6050 zone is also confluent with a 50% Fib retracement from recent move up on 4 HR chart
Risks To This Trade:
- EUR: Interest rate tightening has been pushed back a little too far in the future and data dependent - so bad data will be the risk here.
- AUD: Trade tensions with China alleviated with Trump and XI of China making a favourable trade deal. Also stock market bounce will be a risk to AUD causing it to strengthen mildly.