EUR/AUD Bears Aims Lower Amid Forecast of Falling Economic Sentiment in Germany

EUR/AUD  Forecast & Technical Analysis

Australia – National Australia Bank (NAB) Limited Business Confidence Index

On Tuesday, at GMT 12:30 a.m., the National Australia Bank (NAB) Limited released its monthly business confidence index figure. It measures the level of a diffusion index based on a survey of 350 businesses in Australia.

The survey asks respondents to rate the current business environment in Australia. Businesses are the first to react to changing business conditions. So, Highlow binary options traders consider it a leading indicator of overall economic health in the coming months. It is because the level of their sentiment can signal optimism and business confidence in the economy.

Last month, the NAB business confidence index reading came out at -4. This month, it went up and came out at 5.

Eurozone – German ZEW Economic Sentiment

On Tuesday, at GMT 10:00 a.m., the Zentrum fur Europaische Wirtschaftsforschung (ZEW) released its German economic sentiment index. It measures the level of a diffusion index based on surveying 275 German institutional investors and market analysts.

Since the professional investment community, investors, and analysts have the latest data; their reflection about the economy tends to be the most accurate. Therefore, Australian binary options trading investors consider the ZEW’s German economic sentiment index to be a leading indicator of the entire Eurozone economy. This is because the German economy is one of the most important driving forces behind the Euro currency.

Last month, the ZEW German economic sentiment came out at 52.3. This month, analysts were expecting it to come out at 43.3. However, the actual figure came out much worse, at 32.8.

EUR/AUD Forecast

Chart of EUR/AUD - 10th November 2020

Since October 20, 2020, the EUR/AUD remained in a strong downtrend. Over the last three weeks, it went down by around 645 pips. Yesterday, it found support near the 1.6200 level. Currently, it is in an intermediate bullish retracement and trading around 40 pips above this support level. If it breaks below the 1.6200 level, the EUR/AUD will likely find another strong support near the 1.6135 level.

The Australian NAB Business Confidence went up from -4 to 5. On the other hand, the German ZEW Economic Sentiment came down from 52.3 to 32.8. 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 1.6200, it would likely attract additional bearish momentum in the market.

Hence,  traders should look out for trading opportunities below this major support level around 1.6200.

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