EUR_AUD (135 Pips)

Fundamental Analysis
The EUR/AUD pair has been under pressure recently, hitting an 18-month low last week. Several factors are influencing this movement:

1. Eurozone Economic Weakness:
The Eurozone continues to face economic challenges, with industrial production declining by 2.0% in September compared to August. This contraction is driven by a decrease in capital goods and energy output, which outweighs gains in consumer goods[3]. Additionally, the Eurozone Sentix Investor Confidence remains negative, reflecting ongoing economic uncertainty[5].

2. Australian Economic Resilience:
In contrast, Australia's economy shows signs of resilience. Although the unemployment rate remained steady at 4.1% in October, employment growth was lower than expected[3]. However, the Australian dollar is benefiting from strong sentiment across FX markets and a relatively stable economic outlook.

3. Monetary Policy Divergence:
The European Central Bank's cautious approach contrasts with the Reserve Bank of Australia's stance. While the ECB has cut rates earlier than the Federal Reserve, their future moves remain uncertain[2]. Meanwhile, the RBA's potential rate cuts are not expected until early 2025[2].

Technical Analysis
The EUR/AUD pair is showing a bearish trend, having broken below several key support levels:

- Support Levels: The pair has fallen below 1.6100, with further support seen at 1.6003 (October 2 swing low) and potentially down to 1.5848 (June 15, 2023 low)[6].
- Resistance Levels: Resistance is likely around 1.6125 and 1.6200, which were previous support levels now turned resistance[1][4].

The technical outlook suggests a continuation of the bearish trend:

- Head-and-Shoulders Pattern: A head-and-shoulders pattern has emerged, indicating potential for further downside if the neckline around 1.6200 remains unbroken[6].
- Moving Averages and Indicators: The pair is trading below key moving averages, including the 200-period moving average on the H4 chart, which indicates a bearish bias[3]. The MACD and Parabolic SAR also signal selling opportunities[3].

Outlook for the Week
Given the current fundamental and technical landscape, EUR/AUD is likely to remain under pressure in the coming week. The pair could trade within a range of:

- Lower Bound: 1.5848 (next significant support level)
- Upper Bound: 1.6200 (key resistance level)

Traders should monitor upcoming economic data from both regions:

- Eurozone: Any updates on industrial production or investor confidence could impact the euro.
- Australia: Employment data and any changes in RBA policy expectations will be crucial.

In summary, unless there is a significant shift in economic data or central bank policies, EUR/AUD may continue its downward trajectory towards lower support levels.

Citations:
[1] fxpro.news/tech-analysis/euraud-wave-analysis-7-november-2024-20241107/
[2] oanda.com/us-en/trade-tap-blog/trading-knowledge/forex-pairs-to-watch-november-2024/
[3] ifcmfx.com/en/technical-analysis/eur-aud/2024-11-15
[4] actionforex.com/category/technical-outlook/euraud-outlook/
[5] paxforex.org/forex-fundamental-analysis/euraud-forecast-november-04th-2024
[6] teletrade.org/analytics/market-analysis/market-news/4013267
[7] paxforex.org/forex-fundamental-analysis/euraud-forecast-january-02nd-2024

Trade
(Highest Probability):
- Entry: Sell at 1.6160
- Stop Loss: 1.6190 (30 pips)
- Take Profit: 1.6025 (135 pips)
- Rationale: This trade aligns with both technical and fundamental factors. The level represents a key resistance zone, and the bearish trend supports a rejection at this level. The head-and-shoulders pattern and below-MA trading support this direction.