The downward trend formed at the beginning of this year continues. The Australian dollar as an indicator of risk sentiment should have lost the most, but it looks decent in this currency pair, simply because the EU is at the epicenter of this year's geopolitical events and is experiencing serious problems in the economy due to its sanctions against Russia. Australia, on the other hand, is as far away as possible from everything that is happening.
Recent macroeconomic reports show us a decline in business activity in the eurozone. In September, business activity amounted to 48.9 points, which is the lowest indicator for the whole year. At the same time, it should be noted that the decline has been observed for the fifth month in a row and we can hardly expect an improvement next month. The consumer confidence index was -28.8 points, which is also the lowest since 1985.
Of course, the economic situation in Australia is better: there is still business activity above 50 points and low unemployment, but inflation is higher than we would like. In comparison with the euro, AUD certainly remains the most preferred asset for investment.
Next week, the focus will be on reports from the EU: German GDP, inflation, and unemployment. Given all the circumstances, we can quite expect a deterioration in economic indicators in all parameters. Real reports may not correspond to forecasts, although in September the situation may not be as bad as in the future.
EUR/AUD is a confrontation of weak currency pairs, but due to the situation in Europe and its aggravation, we still prefer the Australian dollar. The RBA is also more determined in raising interest rates than the ECB. MACD, Stochastic oscillators indicate a downward movement and we believe that the AUD will be able to cope with the euro, as the economic situation in the EU will rapidly deteriorate before the end of the year. Therefore, our choice today is the deals to SELL.
