This week our foreign money strategists centered on Australia’s CPI Report (Could 2025) for potential high-quality setups.
Out of the 4 state of affairs/value outlook discussions this week, one dialogue arguably noticed each fundie & technical arguments triggered to change into potential candidates for a commerce & danger administration overlay.
Watchlists are value outlook & technique discussions supported by each basic & technical evaluation, an important step in the direction of making a prime quality discretionary commerce concept earlier than engaged on a danger & commerce administration plan.
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Take a look at our evaluate on these discussions to see what occurred!
EUR/AUD: Wednesday – June 25, 2025
EUR/AUD 1-hour Foreign exchange Chart by TradingView
On Wednesday, our strategists had their sights set on Australia’s CPI report for Could 2025 and its potential impression on the Australian greenback.
Primarily based on our Occasion Information, expectations had been for headline inflation to carry regular at 2.4% year-on-year, with merchants probably paying shut consideration to underlying metrics to gauge sticky inflationary pressures.
With these expectations in thoughts, right here’s what we had been pondering:
The “Aussie Advance” Situation:
If the CPI got here in stronger than anticipated, we anticipated this might reinforce the RBA’s hawkish stance on retaining charges “sufficiently restrictive,” probably lowering market expectations for aggressive price cuts within the second half of 2025.
We centered on AUD/CHF for potential lengthy methods if broad danger sentiment leaned web optimistic, particularly given the Swiss Nationwide Financial institution’s latest dovish pivot and price cuts to zero.
In a risk-off setting the place conventional safe-havens usually outperform, AUD/NZD lengthy made sense given the central financial institution coverage divergence, with the RBNZ delivering six consecutive price cuts whereas the RBA maintained a extra measured method.
The “Aussie Avalanche” Situation:
If Australia’s inflation information dissatisfied, displaying a major slowdown in value development, we thought this might weaken the Aussie and gasoline dovish RBA repricing.
On this case, we thought of EUR/AUD for potential lengthy methods in a risk-on setting, significantly given the ECB’s hints at pausing its price slicing cycle with officers suggesting they’ve reached “impartial territory.”
If danger sentiment leaned destructive, AUD/JPY shorts appeared promising given the Financial institution of Japan’s preparation for potential price hikes, creating underlying coverage divergence that might favor safe-haven flows into JPY.
What Truly Occurred
Australia’s Could CPI report delivered a notable disappointment throughout the board. The headline inflation price dropped to 2.1% year-on-year, considerably under the two.4% expectation and marking a sharper decline than anticipated. This represented essentially the most dovish shock in a number of months for Australian inflation information.
Key factors from the CPI report:
- Headline CPI fell to 2.1% y/y versus 2.4% anticipated, the largest miss since early 2025
- Underlying value pressures confirmed broad-based cooling, with core measures additionally coming in softer than anticipated
- The TD-MI Inflation Gauge had already hinted at weak spot, recording the largest month-to-month drop in 33 months main as much as the official launch
- Companies sector value pressures “notably eased” in accordance with latest PMI studies, foreshadowing the softer print
Market Response
This consequence essentially triggered our AUD bearish eventualities, and with danger sentiment enhancing following the Israel-Iran ceasefire developments earlier within the week, EUR/AUD turned our focus.
EUR/AUD 1-Hour Foreign exchange Chart by TradingView
Wanting on the EUR/AUD chart, we are able to see the pair discovered assist close to the 1.7850 minor psychological stage and rising shifting averages confluence throughout pre-release consolidation.
After the disappointing CPI information hit the wires, the basic catalyst sparked a direct transfer greater, with EUR/AUD breaking again above the 38.2% Fib and pushing towards the R1 stage close to 1.7950.
The euro’s good points had been supported by the stark distinction between the ECB’s hints at pausing price cuts versus the now-likely dovish RBA repricing following the inflation miss. The pair’s upward momentum was amplified by the broader risk-on setting, as enhancing geopolitical sentiment following the Center East ceasefire diminished demand for safe-haven belongings whereas highlighting the financial coverage divergence theme.
EUR/AUD maintained most of its post-CPI good points all through the week, constantly buying and selling above the occasion value and reaching intraweek highs as merchants positioned for potential RBA easing.
The Verdict
So, how’d we do?
Our basic evaluation appropriately anticipated AUD weak spot on disappointing inflation information, which materialized precisely as anticipated with the two.1% versus 2.4% miss. Our technical evaluation additionally precisely recognized the potential assist space and potential breakout ranges on the EUR/AUD chart.
If merchants entered lengthy positions close to the world of curiosity after the weak CPI launch, they might have captured a strong transfer greater that sustained via the week. The technique execution was comparatively simple given the clear basic catalyst and technical setup alignment.
Total, we predict this dialogue was “extremely probably” supportive of a web optimistic consequence as each basic and technical triggers aligned nicely. The disappointing Australian CPI offered the right catalyst for dovish RBA repricing, whereas the enhancing danger sentiment setting favored the EUR/AUD lengthy thesis over different bearish AUD eventualities.
The pair hardly ever frolicked under the occasion value stage and ended the week close to intraweek highs, suggesting merchants probably didn’t want advanced danger administration methods to generate optimistic returns.
