HSBC lowers EUR-AUD trade target, stop-loss by Investing.com

HSBC Global Research has adjusted its position on the EUR-AUD currency pair, setting a lower target and stop-loss levels for its sell trade idea.

On the other hand, the firm revised its target down to 1.5690 from the initial open position on September 20 at 1.6400. The stop-loss was also tightened at 1.6150.

The decision comes after a series of negative euro zone data pulses that have persisted since the trade idea was initiated. Market expectations are currently for a 25 basis point interest rate cut by the European Central Bank (ECB) in October.

However, other dovish signals, in line with ECB President Lagarde’s comments on September 30, could trigger further market adjustments. Speculation is brewing that cuts could reach 50 basis points if the current trend continues.

Eurozone fiscal concerns add pressure on the euro, as evidenced by the sustained spread between 10-year OAT (French government bond) yields and German Bund yields. These factors contribute to the bearish outlook for the euro against the Australian dollar.

Instead, the Reserve Bank of Australia (RBA) is expected to maintain its current policy stance while other central banks ease theirs.

HSBC economists also anticipate further stimulus from China could benefit the Australian dollar. With the terms of exchange changing in favor of the AUD, HSBC’s analysis suggests the currency will outperform the euro.

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