Australian Dollar to Euro (AUD/EUR) Exchange Rate Forecast: Single Currency on Uptrend amid Risk Aversion

  • Posted on

Euros (EUR)

The Australian Dollar (AUD) has returned to bearish form at the beginning of the week as domestic business confidence declines and the latest stock market rally runs out of steam.

ECB Dovishness Boosted AUD/EUR Exchange Rate to Two-Week High

After hitting a four-month low of 0.6237 in the midst of last week’s commodity sell-off the Australian Dollar to Euro (AUD/EUR) exchange rate began to recover some of its strength ahead of the weekend. European Central Bank (ECB) President Mario Draghi helped to talk down the Euro (EUR) by once again reiterating the willingness of policymakers to loosen monetary policy should inflationary pressure within the Eurozone remain weak. While pundits had shown some scepticism towards the central bank’s ability to deliver on this dovishness the single currency nevertheless slumped against rivals.

Demand for the ‘Aussie’ (AUD), meanwhile, was shored up as stock markets made efforts to claw back losses at the end of a turbulent week. Risk appetite rose in response to a strong rally in oil prices, which broke back above $30 and continued to strengthen during Friday’s European session. Consequently the AUD/EUR pairing trended higher to a two-week best of 0.6508.

Euro (EUR) Trends Higher despite Disappointing German Economic Sentiment Survey, ‘Aussie’ (AUD) Softened by Market Volatility

Market optimism has, however, faded somewhat at the start of the new week to push the antipodean currency back onto a downtrend. The NAB Business Confidence Index was found to have declined from 5 to 3 in December, another demonstration of the negative impact that the current global slowdown is having on sentiment in the Australian economy that has given pundits little reason to favour the commodity-correlated currency.

Safe-haven demand has helped to shore up the Euro afresh, in spite of the latest German ZEW Economic Sentiment Surveys falling short of forecast. Confidence in the Eurozone’s powerhouse economy has weakened further at the start of 2016, as negative global headwinds drag on the outlook of German businesses.

AUD/EUR Exchange Rate Forecast: Higher Australian Inflation Predicted to Boost ‘Aussie’

Later in the week the Australian Dollar may rally more strongly with the release of the fourth quarter Australian Consumer Price Index data, as inflation is forecast to have shown a minor uptick on the year from 1.5% to 1.6%. Stronger inflationary pressure is likely to deter the Reserve Bank of Australia (RBA) from lowering interest rates in the near-term, a prospect which is expected to boost the appeal of the ‘Aussie’.

Current AUD, EUR Exchange Rates

At the time of writing, the Australian Dollar to Euro (AUD/EUR) exchange rate was slumped in the region of 0.6461, while the Euro to Australian Dollar (EUR/AUD) pairing was making strong gains around 1.5470.

« Previous Story

Australian Dollar to Euro (AUD/EUR) Exchange Rate Forecast: ‘Aussie’ Bullish in spite of Slowing Chinese Growth

Next Story »

Australian Dollar to Euro (AUD/EUR) Exchange Rate Forecast: ‘Aussie’ Downtrends

Disclaimer: and its data provider, TorFX, make no claims regarding the validity or exactness of the information provided in on this site and will not be held liable for any use, interpretation, or other implementation of the information provided. make no warranties, express or implied, as to results to be obtained from use of such information, and make no express or implied warranties of condition, quality, performance, merchantability or fitness for a particular purpose or use. shall not have any liability for the accuracy of the information contained in the services provided or ommissions there in which are made available on a free, as-is basis. None of the aforementioned parties shall be liable for any third party claims or losses of any nature, including, but not limited to, lost profits, punitive, consequential, special, incidental, indirect or similar damages even if advised of the possibility of such damages. Rates offered are interbank rates and may not be the same as offered by your financial institution, and do not include commissions. Rates shown on this site will vary from those provided by TorFX or other providers linked to from this site.