HSBC Global Research Adjusts EUR-AUD Sell Trade Idea: Lower Target and Stop-Loss Levels Set
HSBC Global Research has made a significant adjustment to its position on the EUR-AUD currency pair, setting a lower target and stop-loss levels for its sell trade idea. The firm has revised its target down to 1.5690 from the initial position opened on September 20 at 1.6400, while also tightening the stop-loss to 1.6150.
The decision comes in response to a series of negative data impulses from the Eurozone, with market expectations now factoring in a 25 basis point rate cut by the European Central Bank (ECB) in October. Additionally, further dovish signals in line with ECB President Lagarde's comments on September 30 could trigger more market adjustments, with speculations suggesting cuts of up to 50 basis points if the current trend persists.
The Eurozone's fiscal concerns, highlighted by the wide spread between the 10-year OAT (French government bonds) and German Bund yields, are contributing to the bearish outlook for the euro against the Australian dollar. On the other hand, the Reserve Bank of Australia (RBA) is expected to maintain its current policy stance, while other central banks are easing theirs.
HSBC economists also foresee additional policy stimulus from China, which is likely to benefit the Australian dollar. With the terms of trade shifting in favor of the AUD, HSBC's analysis indicates that the currency will outperform the euro.
In conclusion, the current market conditions suggest a challenging environment for the euro against the Australian dollar, with potential further downside risks ahead. Investors should closely monitor the developments in the Eurozone, as well as any policy changes from the ECB and RBA, to make informed decisions regarding their investments in the EUR-AUD currency pair.