EUR/AUD halted downside movement yesterday and closed with a bullish engulfing pattern, indicating strong upside potential in the near future. The sentiment however remains bearish due to Lower Low in the recent move.

Technical Analysis

As of this writing, the pair is being traded near 1.4672. A hurdle can be seen around 1.4730, the 61.8% fib level ahead of 1.4940 that is the 50% fib level. A daily closing above 1.4940 could incite renewed buying interest, exposing rallies above the 15000 handle.

On the downside, the pair is expected to find a support near 1.4470 that is the 76.4% fib level ahead of 1.4050 which is the swing low of the previous wave as demonstrated in the following chart.

Consumer Price Index

The Consumer Price Index (CPI)—a main gauge for inflation—increased across the Eurozone by 0.7% during April as compared to 0.5% increase in the same month of the year before, a report by the EuroStat revealed on Thursday; the CPI figure was in line with the median projection of analysts.

Moreover, the Core CPI—a more accurate gauge for inflation—increased by 1.0% during April compared with 0.7% in the same month of the year before, up beating the average forecast of 0.7% increase. Generally speaking, higher CPI figures are considered positive for the economy and vice versa.

Eurozone Growth

The Eurozone grew at just 0.2% during the first quarter of the ongoing year as compared to the same growth in the quarter before, down beating the average forecast of 0.4% growth. Similarly, the growth remained 0.9% in the first quarter as compared to 0.5% growth in the same quarter of the year before, again down beating the average forecast of 1.1%. Generally speaking, higher growth is considered positive for the economy and vice versa.

Conclusion

Considering the recent bullish momentum in the Euro, buying the pair around the current levels could be a good strategy. The stop should be placed at the swing low of the yesterday bar.

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