Omicron Weighs On EUR/AUD
Tickmill | Dec 06, 2021 09:28AM ET
The recent breakout higher in EUR/AUD has seen the market blowing through several key levels. The rally has recently stalled into a retest of the broken bull channel and the 1.6163 level resistance. However, with around 75% of the retail market currently short, there is plenty of room for the current rally to continue.
Additionally, the risks around the COVID backdrop are skewed towards a more significant downside for the higher-beta AUD meaning that any deterioration in Omicron news flow is likely to send the pair higher. Bulls can look for a breakout above 1.6163, targeting a run back up to the 1.6419 highs.
h2 RBA Meet In Sight/h2The big focus will be the RBA meeting later tonight. Following a slew of better-than-expected data recently, there are chances of the pair moving upside going into the meeting. However, given the fresh uncertainty over Omicron and the high likelihood of fresh Aussie lockdowns on the horizon, it seems reasonable to expect the RBA to remain on hold at this point.
Consequently, the focus will be on the guidance. If the RBA sounds overly alarmed by Omicron, this will weigh on AUD near term.
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