Despite doing an upward move during the last few sessions following the weak Chinese economic data released on Friday, EURAUD remains positioned within a severe downtrend. The Euro has been hammered of late as the ECB has embarked on its first tightening cycle in a decade with Europe facing a recession.
While European policymakers have not been as blunt as their British counterparts, recession may be unavoidable as the Eurozone struggles to control energy costs. German and French energy costs have soared as a record warm summer has worsened the ongoing crisis. Drought has seen the Rhine River fall to dangerously low levels, limiting the ability to rely on hydropower while also worsening supply chain disruptions as barges struggle to traverse the river.
With this plethora of headwinds surrounding Europe, it is hard to be bullish case for the Euro. Additional rate hikes from the ECB may be currency-negative, as they may further restrict economic activity in the region. That being said, EURAUD may soon make a visit back to the yearly low below 1.44. The pair has already broken through a major support zone between 1.45 and 1.46, which has now turned into resistance. A failure here coupled with continued weakness from the Eurozone could usher in fresh yearly lows in the near-term.
While European policymakers have not been as blunt as their British counterparts, recession may be unavoidable as the Eurozone struggles to control energy costs. German and French energy costs have soared as a record warm summer has worsened the ongoing crisis. Drought has seen the Rhine River fall to dangerously low levels, limiting the ability to rely on hydropower while also worsening supply chain disruptions as barges struggle to traverse the river.
With this plethora of headwinds surrounding Europe, it is hard to be bullish case for the Euro. Additional rate hikes from the ECB may be currency-negative, as they may further restrict economic activity in the region. That being said, EURAUD may soon make a visit back to the yearly low below 1.44. The pair has already broken through a major support zone between 1.45 and 1.46, which has now turned into resistance. A failure here coupled with continued weakness from the Eurozone could usher in fresh yearly lows in the near-term.