Bullish Pivot Looms if Structural Support Holds Decisively

Central Bank

Economic

Summary:

Given that this moving average has followed the downward trend in close synchronicity with the channel, it is expected to provide a layer of dynamic resistance.

BUY EURAUD

EXP

PENDING

1.62100

Entry Price

1.63320

1.61300

1.62461 +0.00147 +0.09%

Pips

PENDING

1.61300

Exit Price

1.62100

Entry Price

1.63320

Eurostat reported on Wednesday that the Eurozone’s Producer Price Index (PPI) experienced a notable and sharp acceleration, ascending to a 2.1% year-over-year expansion in March. This print represents a significant reversal from the previous 3% contraction and arrived well above broader market expectations. On a month-over-month basis, the indicator surged by 3.4%, marking its most substantial increase in nearly four years. These figures have reignited concerns regarding entrenched inflationary pressures across the bloc, effectively strengthening the case for further monetary tightening by the European Central Bank (ECB). Bundesbank President Joachim Nagel reinforced this hawkish sentiment on Monday, asserting that a rate hike as early as June remains a distinct possibility should the medium-term inflation outlook fail to show rapid signs of moderation.

Simultaneously, high-frequency activity indicators continue to signal a persistent economic deceleration within the region. The final HCOB Eurozone Services PMI for April was revised slightly higher to 47.6 from its preliminary estimate of 47.4; however, the reading remains deeply entrenched beneath the critical 50.0 threshold that separates expansion from contraction. Furthermore, the Composite PMI—at 48.8—continues to point toward a general contraction in aggregate economic activity. This creates a challenging environment for policymakers, who must now navigate the "stagflationary" risk of rising producer prices amidst a backdrop of cooling domestic demand and manufacturing fatigue.

Across the globe, the Reserve Bank of Australia (RBA) recently implemented a 25-basis-point rate hike during its latest session while simultaneously signaling a tactical pause that remains strictly contingent upon forthcoming economic data. Governor Michele Bullock underscored this strategic positioning, noting that a primary objective behind the adjustment was to secure sufficient policy flexibility to monitor evolving economic conditions effectively before committing to further restrictive measures. The RBA board reached an 8-1 consensus to deliver this third consecutive increase, effectively elevating the Official Cash Rate (OCR) to 4.35%, a move that aligned closely with cash rate futures. The central bank highlighted that inflation is likely to persist above its target threshold for a prolonged duration, with risks remaining decisively skewed to the upside, particularly regarding long-term inflationary expectations and the pass-through effects of rising fuel costs. Consequently, the RBA has recalibrated its medium-term projections, now suggesting that policy-relevant underlying inflation will remain above the 2-3% corridor until mid-2027, a significant extension from its previous forecast of late 2026. Bullish Pivot Looms if Structural Support Holds Decisively_1

Bullish Pivot Looms if Structural Support Holds Decisively_1

Tecnical Analysis

From a technical perspective, EURAUD remains entrenched within a well-defined descending channel that has recently encountered significant structural support at the 1.6202 handle. This specific price zone carries historical weight, having served as a pivot for a bullish rejection back on March 17. The recent positive price action at this level suggests the potential for a corrective impulse toward the 1.6332 resistance zone. This target area is particularly significant as it aligns with the upper boundary of the descending channel and is likely to converge with the 100-period Moving Average. Given that this moving average has followed the downward trend in close synchronicity with the channel, it is expected to provide a layer of dynamic resistance should the price approach it.

Our analysis of momentum oscillators further corroborates the thesis of a nascent bullish pivot. The Relative Strength Index (RSI) recently rebounded from the 27 level after striking oversold extremes, suggesting that sell-side exhaustion may be setting in and that bulls are beginning to reclaim tactical control. Simultaneously, the MACD is printing a bearish histogram that is visibly losing depth, signaling that a bullish crossover is imminent.

With the signal lines oscillating just beneath the neutral threshold, a failure to break decisively below the current support floor could shift the broader technical sentiment in favor of the bulls. Provided the 1.6202 support remains mitigated, the path of least resistance appears to favor a corrective expansion toward the upper channel limits.

Trading Recommendations

Trading direction: Buy

Entry price: 1.6210

Target price: 1.6332

Stop loss: 1.6130

Validity: May 15, 2026 15:00:00

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Bullish Pivot Looms if Structural Support Holds Decisively

Tecnical Analysis

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