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Euro holds above $1.165, while AUD lags on RBA hawkish stance
EUR/AUD is still capped by a late-June descending trendline and has tested below 1.6300 support, as ECB pricing extends to more than 40 bp of additional tightening this year.
The euro has been strengthening against the Australian dollar, holding above $1.165, its highest level since mid-May, as markets increasingly price an ECB hike in September after the bank’s June tightening move, Action Forex reports. The move is supported by updates from Germany, including a revision to Q2 GDP growth to 0.3% and an August business activity improvement tied to stronger German manufacturing, the outlet adds.
Despite the ECB momentum, energy prices tied to the Middle East conflict remain a key concern for the central bank, which is keeping investors focused on more than 40 bp of additional tightening priced for later in the year, Action Forex says. Meanwhile, the Aussie has failed to keep pace even after the RBA delivered a hawkish hold on August 11, with Governor Bullock saying it would raise rates again if needed, and Deputy Governor Andrew Hauser highlighting inflation upside risks including the Middle East conflict and the AI investment boom, the outlet reports.
Action Forex also points to technical pressure on EUR/AUD, saying the pair recently broke below the 1.6300 support area and is testing a steeper short-term descending trendline, with RSI divergence suggesting fading downside momentum. The outlet frames potential next steps as a reaction to that level, either toward a retest of 1.6300 to 1.6350 and then 1.6400 to 1.6450 resistance if buyers break higher, or toward further lows below 1.6255 if selling resumes, according to the article.