Pullback to Structural Support May Re-Ignite Bullish Interest in EURAUD

Forex

Economic

Summary:

To date, this area has remained unbreached by sellers, suggesting that a secondary bullish impulse may be in the early stages of development.

BUY EURAUD

EXP

TRADING

1.66798

Entry Price

1.68000

1.66100

1.66622 -0.00203 -0.12%

0.0

Pips

Flat

1.66100

Exit Price

1.66798

Entry Price

1.68000

Aggressively hawkish rhetoric from European Central Bank (ECB) policymakers continues to provide a vital structural tailwind for the common currency. The institution remains steadfast in its mandate to combat persistent price pressures, with President Christine Lagarde and other high-ranking members of the Governing Council maintaining a remarkably consistent narrative. They have repeatedly emphasized that monetary policy will remain in restrictive territory until inflation returns to the 2% target in a durable and sustainable manner.

This burgeoning hawkish sentiment has been further reinforced by Governing Council member Gabriel Makhlouf, who recently asserted that the institution stands ready to intervene aggressively once the broader economic ramifications of the current regional conflict become more transparent. Makhlouf cautioned that a protracted military engagement would likely push the Eurozone economy toward the "adverse scenario" currently modeled by the bank’s analysts. For the time being, the ECB is maintaining a posture of strategic neutrality, carefully avoiding either the confirmation or discounting of any specific policy trajectory until more definitive data becomes available.

Simultaneously, the Reserve Bank of Australia (RBA) further restricted its monetary policy during its March deliberations, elevating the official cash rate by 25 basis points to 4.10%. This strategic move, finalized via a narrowly contested 5-4 vote, represents the institution's second consecutive rate hike. Consequently, the release of the RBA’s meeting minutes this coming Tuesday will be meticulously scrutinized by market participants seeking to gauge the Board’s appetite for a potential third consecutive increase during the upcoming May session.

Reinforcing this hawkish sentiment, RBA Assistant Governor Christopher Kent recently issued a stark warning regarding the global supply landscape. He observed that a protracted supply-side shock—fueled by the ongoing hostilities in the Middle East—could substantially drive up both headline inflation and long-term inflationary expectations. Under such a scenario, Kent suggested that a more restrictive policy posture might be necessary to maintain price stability and prevent inflationary pressures from becoming structurally entrenched within the domestic economy. Pullback to Structural Support May Re-Ignite Bullish Interest in EURAUD_1

Pullback to Structural Support May Re-Ignite Bullish Interest in EURAUD_1

Technical Analysis

From a technical perspective, EUR/AUD has recently exhibited a powerful bullish impulse, reaching a local peak of 1.6845. Following this expansion, price action initiated a technical retracement that has successfully found a floor at the 1.6678 support zone. To date, this area has remained unbreached by sellers, suggesting that a secondary bullish impulse may be in the early stages of development.

On the 4-hour (H4) chart, the 100 and 200-period Moving Averages (MAs) are currently tracking at 1.6557 and 1.6538, respectively. Notably, these dynamic indicators have recently executed a bullish "golden cross," signaling that the broader structural context remains firmly skewed to the upside despite the recent localized correction.

Our analysis of momentum oscillators provides further validation for a potential rebound. The Relative Strength Index (RSI) is currently hovering at the 46 level after a brief dip to 41. Interestingly, while the price retracement has been relatively contained, the RSI exhibited a significant retreat, hinting at a lack of conviction from the bears during the pullback.

Simultaneously, the MACD has maintained a bearish histogram; however, the bars have failed to gain meaningful depth since the inception of the retracement and are already showing signs of contraction. With the signal lines currently oscillating near the neutral threshold, a bullish histogram crossover appears to be the primary catalyst required to ignite a fresh upward move. As long as the structural support at 1.6678 holds, the path of least resistance favors a resurgent bullish expansion.

Trading Recommendations

Trading direction: Buy

Entry price: 1.6680

Target price: 1.6800

Stop loss: 1.6610

Validity: Apr 17, 2026 15:00:00

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Pullback to Structural Support May Re-Ignite Bullish Interest in EURAUD

Technical Analysis

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