The European Central Bank (ECB) met market expectations by raising its key interest rates by 25 basis points on Thursday, positioning the deposit facility rate at 2.25%. With this decision, the institution ended a period of seven consecutive meetings with an unchanged monetary policy, inside an economic backdrop marked by growing inflationary pressures coming from rising energy costs. In its official statement, the ECB highlighted that the ongoing conflict in the Middle East is contributing to higher inflation risks, noting that the rate adjustment is appropriate under various scenarios that evaluate the potential development of the energy shock and its medium-term impact on the Eurozone economic outlook. During the subsequent press conference, ECB President Christine Lagarde repeated that future policy choices will remain strictly dependent on incoming economic data and dismissed the idea of a pre-set path for interest rates. Furthermore, she stressed that risks to inflation keep tilting to the upside, while economic growth perspectives face downside risks. The new Eurosystem staff projections reflect this environment, with headline inflation now estimated to average 3% in 2026, 2.3% in 2027, and 2% in 2028. Notably, the forecasts for 2026 and 2027 were revised upward compared to those published in March, reinforcing the concerns of monetary officials regarding the persistent nature of price pressures.

Meanwhile, in Australia, market participants consider it probable that the Reserve Bank of Australia (RBA) will maintain its Official Cash Rate (OCR) unchanged at its upcoming policy meeting. Nonetheless, the central bank is expected to keep a restrictive tone that supports market expectations for a potential rate increase in August. RBA Governor Michele Bullock repeated last Thursday that the central bank's main priority remains controlling inflation, following three rate hikes implemented during the year that pushed the cash rate to 4.35%. Bullock stated that inflation remains too high and assured that the institution will take the necessary steps to meet its mandate of price stability and full employment. Her comments come at a time when the Australian economy is showing increasingly visible signs of a broader slowdown. Data released by the Australian Bureau of Statistics revealed that Gross Domestic Product (GDP) grew by 2.5% year-over-year during the first quarter, landing below the 2.6% recorded a year earlier and missing the 2.7% expansion expected by analysts. On a quarter-over-quarter basis, economic activity increased by just 0.3%, missing the projected forecast of 0.5% growth and moderating significantly compared to the 0.8% increase observed in the prior quarter.

Business activity indicators also highlighted a loss of momentum across the private sector. The S&P Global Services PMI dropped to 48.7 in May from its previous level of 50.7, though it managed to beat the initial preliminary estimate of 47.7. In the same manner, the Composite PMI was revised upward to 48.7, landing above both the preliminary reading and the general market expectation of 47.8. However, despite these positive statistical updates, both metrics remain below the neutral 50-point threshold that separates expansion from contraction. This positioning suggests that private sector business conditions continue to face deterioration and indicates that overall economic growth keeps losing its upward dynamism.

From a chart perspective, EUR/AUD has reacted downward with significant force after reaching the 1.6510 level, which functions as a local horizontal resistance zone. This strong downward reaction also produced a price close below the short-term 9-period Moving Average that has been tracking the price closely throughout the main trend, which could be signaling a near-term shift in the short-term bias. Meanwhile, the 100 and 200-period Moving Averages are currently running at 1.6298 and 1.6284, respectively. An important horizontal support zone is also located around these same moving levels, an area that could easily attract price action in a corrective downward move following the previous upward impulse, which had been tracking with a very strong pace.

A review of the oscillator section provides secondary confirmation for this developing downward move. The Relative Strength Index (RSI) turned downward after touching the 75 level in previous sessions, showing that the index had clearly entered overbought territory before this drop.

At the same time, the MACD indicator has already started to print a negative histogram, meaning it could begin to gain more downward depth over the coming sessions. However, because the signal lines are still positioned deep inside the positive zone, it shows that the current downward move still lacks the structural strength to be categorized as a long-term trend reversal. Instead, the chart layout suggests this move is a healthy technical pullback that will likely look to find a solid consolidation platform around these key support areas.

Trading direction: Sell

Entry price: 1.6421

Target price: 1.6290

Stop loss: 1.6550

Validity: Jun 23, 2026 15:00:00