Currency News News AUD EUR Australian Dollar to Euro Exchange Rate Forecast: Are AUD/EUR Gains Ahead on Faster AU Inflation?

Australian Dollar to Euro Exchange Rate Forecast: Are AUD/EUR Gains Ahead on Faster AU Inflation?

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AUD/EUR Exchange Rate Dips on Static AU Unemployment Rate

The Australian Dollar (AUD) could rally against the Euro (EUR) in the coming week, but for the meantime the AUD/EUR exchange rate has dipped due to trader disappointment.

The latest Australian domestic data has shown the unemployment rate remaining at 5.5% in March, having being revised down from 5.6% in February.

Some analysts had forecast for the jobless rate to drop to 5.4% in March; such a result could have boosted Australian Dollar exchange rates.

Offering a cautious take on the data, Indeed APAC Economist Callam Pickering said;

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‘We consider it too early to declare whether the labour market has taken a turn for the worst, since employment growth during 2017 was clearly unsustainable, but policymakers will be closely watching the figures’.

The ideal situation for AUD traders is for unemployment to fall and for wages to rise, which will open the door for a Reserve Bank of Australia (RBA) interest rate hike.

Euro to Australian Dollar (EUR/AUD) Exchange Rate Rises on Eurozone Reform Speculation

Despite a limited amount of supportive economic news, the Euro (EUR) has still made a minor rise against the Australian Dollar (AUD) recently.

This advance comes as French President Emmanuel Macron and German Chancellor Angela Merkel meet to discuss widespread Eurozone reform.

Observers are currently unsure about whether Mr Macron’s plans will be agreeable to Mrs Merkel, given the supposedly lukewarm reception to the scheme.

If successful, Mr Macron could see in the creation of a vast Eurozone common budget, as well as a swelling of the Eurozone’s reserved bailout fund.

Australian Dollar to Euro Exchange Rate Forecast: Can AUD/EUR Advance on Higher Inflation?

The Australian Dollar to Euro (AUD/EUR) exchange rate could rise over the coming week, when high-impact inflation rate data is released on 24th April.

Current expectations are for levels of Q1 inflation to have risen, for both the quarter-on-quarter and year-on-year readings.

Higher AU inflation could put pressure onto the Reserve Bank of Australia (RBA) to consider tightening monetary policy, depending on other Australian data in the future.

Faster inflation along with falling unemployment and rising wages could create ideal conditions for the RBA to hike interest rates, something long awaited by AUD traders.

Looking ahead, the Euro (EUR) could tumble against the Australian Dollar (AUD) next week, when a wide variety of high-impact data releases are due out.

Trading could get off to a bad start on 23rd April, if Eurozone PMI activity readings show slowdowns as expected.

Any EUR/AUD losses could be extended on 24th April, if Germany’s Ifo business climate stats show as-expected declines in economic optimism.

The headline event will be 27th April’s European Central Bank (ECB) interest rate decision, which also has the potential to lower confidence in the Euro.

If ECB policymakers stay cautious and indicate that tighter monetary policy is unlikely anytime soon, the AUD/EUR exchange rate could rise later in the week.

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