Forex Flash: EUR/AUD downside held by ECB backstop – Westpac

FXstreet.com (Barcelona) - The return of genuine political concerns in the Eurozone should continue to chip away at the EUR/USD multiweek while the AUD/USD trades broad ranges, leaving EUR/AUD biased to further decline near term. “1.2350 is the next target for the EUR/AUD, but Novembers 1.2200 lows are probably just out of reach so long as Australia’s domestic outlook is soft enough to keep the RBA warning of further monetary easing. The ECBs bond market backstop plan also argues against substantial further EUR/AUD decline.” Notes Sean Callow, a Global FX Strategist at Westpac.

In addition, the initial support level is the 200-day MA at 1.2420, with 1.2345/50 next, around the Jan 2013 intra-day low and a Fibonacci retracement level. Near-term resistance looks to lie around EUR/AUD 1.2600, calculates Callow.