Analysts have warned that the Euro's uptrend against the Australian dollar could be about to come to an end.

“Last week’s high was a perfect rejection of the top of the parallel channel that has been in play since April ‘15.”

The Euro is desperately trying to ensure its technical advantage against the AUD remains alive following the sharp drop witnessed on Tuesday following the RBA meeting.

The euro to Australian dollar exchange rate (EUR/AUD) has been trending higher since March - sticking to a well-defined channel.

As long as the EUR/AUD remains in the channel then the prospect of further advances is preferred. ‘The trend is your friend’ after all.

The brutal comeback by the Australian dollar following the August RBA event now threatens the prospects facing the euro as the channel is now questioned:


Australian dollar to Euro exchange rate

However, according to analyst David Coloretti at Westpac Bank in Sydney, the writing was on the wall for the euro’s uptrend even before the August RBA event:

“EURAUD produced a bearish weekly candle (shooting star) last week, as it did at the major high in December ‘14.

“Last week’s high was a perfect rejection of the top of the parallel channel that has been in play since April ‘15.”

Note that the high of 1.5277 was marginally short of the Dec ‘14 high at 1.5332.

“Whether the reversal of the last 2 weeks becomes a far more significant reversal will largely depend upon this week’s close. The parallel channel base comes in at 1.4670 this week and coincides with a series of previous highs and lows around that level,” says Coloretti.

A weekly close below 1.4670 will target a minimum decline towards 1.4480 and most likely towards 1.4290 (61.8% retracement) suggests the Westpac forecaster.