My thinking on this pair is that the RBA will definitely cut rates by 25bps on Tuesday next and after the market reaction to the EU debt summit, they may adjust the statement language to allow them room to cut again in January if necessary. Iron ore demand from China is slipping as are prices, and this will weigh on the Australian economy in the medium term.
EUR/AUD is in a range trading pattern, roughly between 1.31/1.41, and I’m building a long position near the base of this range. The early part of the position building phase is the trickiest and most time consuming, as I need to be almost constantly watching the market, especially as my position grows. Might be a sleepless night tonight!
