Barclays trade of the week is to sell the pair
Analysts at Barclays suggest buy puts in EUR/AUD in anticipation of a drop to 1.5716 or lower.
They recommend making the trade via a put option, which can be a way to protect against risks. It can also be a way for brokers to make more money.
Here's what they say:
"We recommend buying 1m (expiry: 13 February 2019) 25-delta OTM EURAUD put (spot ref: 1.5970, strike: 1.5771) at a cost of 35bp (breakeven of the trade is 1.5716). EURUSD is trading at the peak of our expected range (1.10-1.15), while AUD continues to rebound from its earlier losses with general recovery in risk sentiment, which could also be supported by our dovish shift in the Fed's outlook. A near-term risk to this view would be an abrupt shift in sentiment caused by China growth."
In the bigger picture they have a downside bias in the euro and expect Thursday's eurozone inflation data to be at 1.6% (headline) y/y and 1.0% (core).
