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EUR/AUD fails at 200-day average

Huge inflation in the Eurozone will likely keep the euro under pressure this year.

The EUR/AUD cross jumped to the 200-day moving average last week, but that level has been defended by bears and the price dropped nearly half a percent on Monday.

Australian situation is not so positive

Earlier in the day, Australian building permits jumped 3.6% month-on-month, but the yearly gauge declined notably to -7.7% from 3.1% in October. Australia’s Prime Minister Scott Morrison acknowledged on Monday, the highly-contagious Omicron coronavirus variant is having an impact on the country’s workforce and consumer spending.

Alternatively, the country’s Assistant Treasurer Michael Sukkar, said that he is confident the Australian economy can overcome the Omicron challenge with households having the security of huge savings. Moreover, according to the recent CFTC data, net speculative positions on the Australian dollar remain the lowest since the 2020 COVID crash, possibly leading to a short-squeeze rally soon.

EU data paint a negative picture as well

In the Eurozone, Friday’s data showed that the CPI inflation rose again, jumping to the highest level ever during the euro time, printing 5% year-on-year, above the 4.7% expected.

Nevertheless, the ECB remains oblivious, reiterating that it would not raise rates this year, still expecting inflation to ease soon. Judging from the recent inflation momentum, that does not look probable.

Additionally, Friday’s data showed that retail sales in the Eurozone improved notably from 0.3% to 1.0% on the monthly basis, with the yearly change soaring to 7.8% from 1.7% previously.

On the other hand, services sentiment crashed to 11.2 in December (from 18.3 in November) amid more lockdowns and restrictions in many EU countries. The consumer confidence also fell, printing -8.3, down from -6.8 in the previous month.

Today’s economic numbers informed market participants that the EU unemployment rate slid to 7.2% in November. Finally, the Sentix investor confidence improved to 14.9 from 13.5 scored in December.

Expectations were stabilizing at around the previous month's level due to the continued effects of supply bottlenecks and high inflation figures, Sentix Managing Director Patrick Hussy said.

As the AUD/USD pair remains in a steady uptrend since its December lows, but the EUR/USD pair trades with a slight bearish momentum stuck near 1.13, EUR/AUD could decline further over the following days.

Marek is a cryptocurrency enthusiast with several years worth of experience in the industry. He has been working with numerous cryptocurrency and FinTech projects, where his main r...

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