France’s economy may be expanding ahead of forecasts but it looks like Germany is slipping back slightly, suggesting GDP growth will be closer to 2% rather than 3%.
France’s manufacturing purchasing managers index hit a 33-month high in March, at 51.9, but any positive feeling was dispelled by the German number, which edged back slightly despite remaining in expansion territory. We know that the European Central Bank is still unlikely to make any changes in policy that may help stimulate the eurozone, so the focus in the currency pair shifts to the Aussie. Now that the New Zealand central bank has increased its rates, there is a view that the Reserve Bank of Australia will, at least, issue a more hawkish statement.
EUR/AUD now sits plum on the uptrend that began almost exactly a year ago. There has only been one real test of this move higher, during November, and then we saw a convincing bounce that carried the currency cross to its highest level since 2010.
If we can hold above the uptrend around AUD$1.5080, then the March highs in the region of $1.5400/$1.5455 become the target. Even if the uptrend is broken, the $1.5000 level should provide notable support. Tomorrow’s German IFO index could help lift euro sentiment, but we do appear to be at a crucial point in the current uptrend for EUR/AUD.