On Monday at GMT 8:00 a.m., the European Central Bank released the year-over-year M3 money supply figure. It measures the changes in the total quantity of issues currency in the greater Europe. The M3 consists of all hard currency in circulation as well as the bank deposits, including in the central bank.
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EUR/AUD Likely to Turn Bearish Amid Forecast of Improving Housing Market in Australia
EUR/AUD Forecast & Technical Analysis
Eurozone – M3 Money Supply
On Monday at GMT 8:00 a.m., the European Central Bank released the year-over-year M3 money supply figure. It measures the changes in the total quantity of issues currency in the greater Europe. The M3 consists of all hard currency in circulation as well as the bank deposits, including in the central bank.
As the M3 money supply increases, it makes funds available for investments. However, an excess money supply can also lead to inflation and liquidity trap in the economy. Hence, the European Central Bank often adjust their interest rate policy based on the current M3 money supply situation. As a result, highlow traders consider the quantity of the M3 to be a leading indicator of the future direction of the economy.
Last month, the Eurozone M3 money supply increased by 4.3%. This month, the forecast was set at a 4.2% increase. However, the actual figure came out much better at 4.5%.
Australia – Building Approvals
On Friday at GMT 1:30 a.m., the Australian Bureau of Statistics will release the national month-over-month building approvals figure. It measures the changes in the number of approvals of new buildings.
A build permit indicates new construction work. It also suggests that there would be additional positive economic activities. For example, new jobs would be created for construction workers. Therefore, binary options investors consider this data regarding new building approvals to be a leading indicator of the overall economic health of the country.
Last month, the building approvals figure decreased by -12.5%. This month, analysts are expecting it to grow by 19.1%.
EUR/AUD Forecast
The EUR/AUD broke below the downtrend line on March 25, 2019. Over the last month, it mostly remained range bound. During this time, it traded between 1.5685 and 1.5935. Earlier today, the EUR/AUD tested the intermediate support near 1.5820.
The Australian building approval figure will likely improve a lot compared to last month. By contrast, the Eurozone M3 money supply increased only modestly. We believe it would set a bearish fundamental outlook for the EUR/AUD this week. Therefore, if the EUR/AUD closes below the support near 1.5820, it would likely attract additional bearish momentum in the market.
Hence, Australian binary options traders should look out for trading opportunities below this major support level around 1.5820.
Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com
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