Bullish Breakout Opens the Door to Gains Toward the Next Resistance

Central Bank

Economic

Summary:

This breakout presents new buying opportunities because the price has pulled back close to the area of the recent break near the horizontal support of 1.6290.

BUY EURAUD

EXP

TRADING

1.63583

Entry Price

1.65220

1.62450

1.63798 +0.00123 +0.08%

0.0

Pips

Flat

1.62450

Exit Price

1.63583

Entry Price

1.65220

In Europe, the Sentix Investor Confidence index for June improved to -13.4 points from the -16.4 logged in May, achieving its best result in three months but remaining far from leaving negative territory. At the same time, German factory orders dropped by 3.8% month-over-month in April after increasing by 4.5% in March, coming in worse than the 1.2% decline expected by experts. Meanwhile, the EU economy grew by 0.1% quarter-on-quarter in the first quarter of 2026, slowing down from the 0.2% and 0.3% growth rates recorded in the fourth and third quarters of 2025, respectively, which hints at an ongoing economic cooling amid rising prices. This occurs as the HICP reached 3.2% year-over-year, driven mainly by the energy shock tied to the conflict in Iran. Along the same line, the latest inflation figures from the Eurozone continue to support ongoing concerns regarding persistent price pressures.

The Producer Price Index (PPI) logged a monthly increase of 0.6% in April, following a significant 3.4% jump in March, which came in higher than market expectations. On a year-over-year basis, producer price growth accelerated to 4.9%, up from the revised 2.0% reading in the previous month. Similarly, the underlying core Harmonized Index of Consumer Prices (HICP) increased at an annual rate of 2.5% in May, moving up from the 2.2% reported in April and beating the consensus market forecast of 2.4%. Given this backdrop, monetary policymakers at the European Central Bank (ECB) remained vocal about their intentions to raise interest rates due to sticky inflation pushed by energy supply disruptions. Officials including Wunsch, Šimkus, Stournaras, Schnabel, and Nagel, among others, explicitly support a rate hike in June at the upcoming policy meeting.

In Australia, RBA Governor Michele Bullock emphasized on Thursday that the central bank remains strictly focused on curbing inflation, following three interest rate hikes earlier this year that pushed the cash rate to 4.35%. Bullock added that inflation is too high and that the board will do what is necessary to fulfill its mandate of delivering price stability and full employment. This comes even though the Australian economy showed clear signs of slowing down during the first quarter of the year. According to data published on Wednesday by the Australian Bureau of Statistics, Gross Domestic Product (GDP) grew at an annual rate of 2.5%, coming in below the 2.6% recorded in the same period a year earlier and missing the market expectation of a 2.7% expansion. On a quarter-over-quarter basis, economic activity increased by just 0.3%, falling short of the projected 0.5% forecast and moderating significantly from the 0.8% growth rate observed in the previous quarter.

Business activity indicators also highlighted this loss of momentum across the private sector. The S&P Global Services PMI fell to 48.7 in May, down from its previous level of 50.7, though it managed to beat the initial market estimate of 47.7. Similarly, the Composite PMI was revised upward to 48.7 from a lower preliminary reading, landing above the general consensus of 47.8. Despite these positive updates, both metrics remain below the neutral 50-point threshold, pointing to a continued contraction in private sector business conditions. Bullish Breakout Opens the Door to Gains Toward the Next Resistance_1

Bullish Breakout Opens the Door to Gains Toward the Next Resistance_1

Technical Analysis

From a chart perspective, EURAUD has broken upward through the descending trendline, which was running in line with the 200-period Moving Average that had previously offered dynamic resistance. At present, the 200-period Moving Average sits at 1.6277, while the 100-period Moving Average is running at 1.6288. This breakout presents new buying opportunities because the price has pulled back close to the area of the recent break near the horizontal support of 1.6290. Since this support level aligns closely with the moving lines, it creates a steady base for the price to restart its upward move toward 1.6522, which marks the position of the next horizontal resistance ceiling.

A look at the oscillator section provides further confirmation for this rising path. The Relative Strength Index (RSI) is currently tracking at the 63 level, moving closer to overbought territory. However, because the index recently pulled back quickly from overbought extremes, the price has enough room to keep moving upward from its current spot.

At the same time, the MACD indicator is printing a positive histogram, though the bars have recently lost some depth, while its signal lines remain well entrenched inside the bullish zone. This combination of factors suggests that any short-term corrective pullbacks toward the support zone can be viewed as entry opportunities for buyers, as the broader path of least resistance remains directed upward.

Trading Recommendations

Trading direction: Buy

Entry price: 1.6360

Target price: 1.6522

Stop loss: 1.6245

Validity: Jun 19, 2026 15:00:00

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Bullish Breakout Opens the Door to Gains Toward the Next Resistance

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