Trading EUR/AUD

The EUR/AUD currency pair provides an opportunity for traders thanks to the size of the component economies and the isolation of the pair from the US dollar. As one of the most popular forex pairs traded, there is a wealth of information available to assist traders, in the form of charts, historical data and expert technical analysis. This guide will provide a discussion of the key economic impacts on EUR/AUD exchange rates as well as investing strategies and live charts.

EUR/AUD Trading Brokers

Forex.com are a leading forex broker. Offering the largest range of currency pairs (80+) and some of the tightest spreads in the industry.
NinjaTrader offer Traders Futures and Forex trading. Use Auto-trade algorithmic strategies and configure your own trading platform, and trade at the lowest costs.
Trade with leverage on the FX market.
The leading US trading Exchange. Nadex offer genuine exchange trading to US clients on Binary Options. Fully regulated by the CFTC.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Rockfort Markets offers competitive pricing on a wide range of major, minor and exotic currency pairs through MT4 and TWS.
Exinity Trader Pro supports major, minor and exotic forex trading on MT4 and MT5 platforms.
Trade on a handful of the most traded currency pairs with leverage.
Use digital options to take straightforward buy and sell positions on a range of currencies.
Trade on FX pairs with 1:500 leverage.
Zulutrade provide multiple automation and copy trading options across forex, indices, stocks, cryptocurrency and commodities markets
IB Boast a huge market share of global trading. With a minimum deposit of $10,000 however, they remain an option for larger traders only.
One of the largest discount brokers in the US, with a fixed trading commission and access to a large array of trading products and securities
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The Euro

The euro is the official currency of the euro area, more commonly called the eurozone, and has been in place since 1999 when it was used by 11 member states of the European Union (EU). Since then, a further eight members, including four outside the EU, have adopted the euro.

As of April 2019, the euro was the second most traded currency, after the US dollar, being involved in 32.3% of all forex trades. The euro is controlled by the European Central Bank (ECB), which is responsible for monetary policy decisions and implementations.

By far the biggest sector of the EU economy is services, accounting for 74.7% of GDP, followed by manufacturing at 23.8% and agriculture at just 1.5%. The strength of the euro tends to correlate directly to European economic activity, with more activity leading to a stronger currency.

The Australian Dollar

The Australian dollar is the currency not only of Australia but also the Cocos Islands, Norfolk Island, Christmas Island, Tuvalu, Kiribati and Nauru.

The Australian dollar is the fifth most frequently traded currency in the world, involved in 6.8% of trades. The AUD has been a free-floating currency since 1983. The Australian economy is dominated by the services sector, which accounts for 70%, however, the agriculture and mining sectors are also important, taking a 12% share of GDP.

Australia is the second-largest producer and exporter of gold, resulting in a correlation between the price of gold and the strength of the AUD. Hence the Australian dollar is often referred to as a commodity currency.

EUR/AUD; A Minor Pair

The euro-Australian dollar pair is known as a minor cross pair. This is due to its isolation from the USD, so it is not a major pair. Because of the strong global position of the currencies in the G8, it is also not an exotic pair.

Minor pairs such as the EUR/AUD cheapen the conversion from one currency to the other as there is only one conversion required, rather than needing to convert to USD and then back to the other currency.

The popularity of minor pairs for forex trading comes from their isolation and the variation in the strength of the currencies. Generally, minor pairs are more volatile than major ones and they allow traders to take advantage of big swings in the conversion rates.

EUR/AUD Influencing Factors

A bountiful resource for informing EUR/AUD trading strategies is economic news. There are a range of regularly released reports, statistics and graphs, as well as major political and economic events, that can impact conversion rates.

EURAUD FX pair

Inflation

Inflation affects all currencies, with a high inflation rate relative to other economies generally correlating to a weakening currency so that goods prices between countries remain similar. The best way to measure the inflation of the European and Australian economies is through the published Consumer Price Indexes (CPIs).

Generally, the core CPIs are used by traders to inform predictions, as these exclude energy and food, which are much more volatile.

France and Germany account for nearly 50% of the eurozone’s GDP after Brexit, making them significant players in the EUR/AUD pair. These two countries release their own CPI Flash Estimate (France) and Preliminary CPI (Germany), two weeks before the official CPIs, which can help inform trading decisions.

Economic Growth

The overall economic outputs of the relevant economies have a major impact on the exchange rates between EUR and AUD. In simple terms, if the Australian economy performs better than the European economy, the AUD will strengthen against the EUR, and vice versa for European growth.

The GDP is often the best measure of economic strength and growth, with a growing GDP indicative of a strong and healthy economy. The eurozone releases a quarterly GDP report two months after the end of each quarter. The Australian National Accounts (ANA) report details key economic flows and is also released two months after each quarter’s end.

Monetary Policies

Monetary policies implemented by the controlling bank of a currency can have a direct effect on the performance of its economy, but also an indirect impact on exchange rates.

Big differences in the policies implemented by the Reserve Bank of Australia (RBA) and the ECB can change the long-term forecasts of the EUR/AUD exchange rate. This can produce volatility thanks to the opportunity it provides for speculation.

The best tools to follow for the eurozone’s policies are the press releases from the ECB regarding new policies. In particular, the language used by the ECB president in the Q&A section has the largest effect. For example, if the president seems concerned about inflation, interest rates may get raised in future and the euro will likely appreciate.

Politics

Political events in major economies within the EU and the world can influence the exchange rates of a large swathe of currencies and forex pairs, not just those directly affiliated with the affected economy. For example, the uncertainty and instability from the Brexit referendum had big impacts on the GBP and EUR currency strengths, however, swings in other pairs, such as the USD/AUD, have strong correlations with those movements directly attributed to Brexit.

One opportunity for political influence on the EUR’s strength comes from the fact that the euro area is comprised of many countries. This can sometimes cause disagreements amongst the component governments about the future of the currency, the European economy and the best monetary policies. These arguments tend to cause a weakening in the euro thanks to the resulting uncertainty.

Balance of Payments

The balance of payments of a country consists of three accounts: the current account, capital account and financial account. When analysing forex trends, the current account is the most important as it details the trade balance, income payments and other payments between one economy and the rest.

The current account is typically either in surplus or deficit. A deficit means that more money is leaving the economy than entering it, which occurs when imports exceed exports and is negative for the currency’s strength. A surplus is the opposite, with more exports and positive effects on the currency.

Start trading the EURAUD

The eurozone releases a report on the current account status every month. France and Germany also release independent reports each month, which some traders focus on. The Australian Bureau of Statistics releases a report on its balance of payments each quarter.

Sentiment

Another approach for attempting to predict EUR/AUD price movements is with confidence and sentiment reports. Australian economic sentiment can be gauged using the Westpac Consumer Sentiment Index, which asks 1200 consumers how optimistic or pessimistic they are about the future of the Australian economy. Within the eurozone, Germany produces a widely followed sentiment report, called the ZEW. This asks 350 financial experts how they predict the future health of the economy, split only into positive, negative or no change.

Many analysts will have predictions for these report results. If the report exceeds expectations, the currency is likely to strengthen, and likewise, weaken for an underwhelming result.

Day Trading The EUR/AUD

Optimum Window

One of the attractive features of forex investing is its availability for 24/7 trading. This being said, it isn’t always a good idea to trade EUR/AUD regardless of the time of day. The best time to trade currencies is usually when they are most volatile and most liquid, as this brings the spreads down.

While there is no overlap between the Sydney and London trading sessions, historical data suggests investing and trading volumes are at a maximum during the overlap between the London and New York sessions (1300-1700 GMT). However, there are times of increased volatility and opportunity immediately after major economic releases for the European and Australian economies.

EUR/AUD Strategies

There is no perfect trading strategy for EUR/AUD, with exchange rates affected by a myriad of factors, including impossible-to-predict human factors.

There are many forex strategies online. Many investing strategies entail technical EUR/AUD analysis based on geometric patterns in live charts spanning 1 minute to 10 years.

When considering investing strategies and tools developed by other people, the best advice is to do your own due diligence. You should always verify facts and endeavour to understand the underlying factors influencing price changes.

Forex Brokers

Many leading forex brokers, such as Plus 500 and Oanda, today offer a suite of euro to AUD trading tools, including pip calculators, 12 months, 5 years, 10 years, and 20 years charts. Money converters, real-time trading ideas, exchange rate history and live graphs for plotting support and resistance levels are also available. Additionally, alongside live buy or sell quotes, some providers offer futures products, weekly forecasts and longer-term predictions.

Always do your own research to find a broker that offers value in the areas you need.

Final Word On Trading EUR/AUD

The EUR/AUD pair, being a minor cross pair, offers volatility that traders would struggle to find with pairs involving the USD. There are vast resources available, providing information on these two currencies, including major economic reports, outlook predictions and trading strategies. While these can all help inform any trading decisions, tread lightly when using third party resources for EUR/AUD, as technical analysis that is valid today may not accurately forecast or signal exchange rates later in 2021, or even next week.

FAQ

What is the meaning of EUR/AUD?

For this forex pair, the euro is called the base currency and the Australian dollar is the quote currency. The quote currency tells you how much is required to buy the specified quantity (usually 1) of the base currency. If a EUR/AUD quote of 1.56 is given, this can be considered as 1.56 AUD per EUR.

What is the best time to Trade EUR/AUD?

There is no single best time to trade a particular forex pair, as swings can be influenced by any number of factors. However, times of high liquidity and volatility tend to have very low spreads, which for EUR/AUD generally occurs between 13:00 and 17:00 GMT.

What is a commodity currency?

A commodity-based currency moves in the forex markets with the price of a particular commodity due to a large dependence on exporting that commodity. The Australian dollar is often called a commodity currency due to its massive export of gold and the importance of its mining sector.

How can I predict the future EUR/AUD swap rate?

When deciding whether to sell or buy with the EUR/AUD pair, our ‘Influencing Factors’ section details some of the most important economic indicators for projections of EUR/AUD exchange rates. Also available are historical spot rate data from trading charts and strategies that can be used for day trading.

What is today’s conversion rate for the EUR/AUD?

The live FX spot rate for the EUR/AUD today varies each minute. See a live chart for the latest data. This can be used as a converter in both directions. To calculate the value of a pip, simply divide 0.0001 by the exchange rate and multiply the result by the lot size.