Story: Sell EURAUD

Complete trade story with all updates and analysis

On the Radar

EURAUD Potential Scenarios . Will RBA + Chinas PMIs be the Catalysts.

Fundamental & Positioning Context

Monetary Policy Divergence: The European Central Bank's steady policy contrasts with the Reserve Bank of Australia's recent dovish stance and vulnerability to a global slowdown. Australia's reliance on commodity prices and the Chinese economy—both facing headwinds—creates a fundamental weakness for the AUD relative to the EUR. Late Monday China Manufacturing PMI and early Tuesday RBA monetary policy decision should shape the short to medium term outlook for the pair.
Market Sentiment: CFTC positioning data confirms this narrative. Traders are heavily net long on the Euro and net short on the Australian Dollar, indicating a strong market consensus that favors EUR/AUD upside. CFTC shows EUR futures are net long (114.3K), while AUD futures are in net short territory (–59K contracts).

Technical Analysis

Daily Chart

An inverse Head and Shoulders pattern is forming, which is a classic bullish reversal signal. The price has formed the left shoulder and head, and is currently developing the right shoulder.
The neckline of this pattern is the crucial resistance zone between 1.7920 - 1.7940. A breakout above this level would technically confirm the pattern and signal a continuation of the broader uptrend.
Support for the right shoulder is forming around the 1.7770 level.

Four-Hour Chart

This chart provides a closer look at the key levels. The price recently broke 1.7845, a neckline for a minor double bottom pattern
A likely scenario on Monday is we could trade between this support at 1.7845 and the key longer term resistance and neckline for the potential inverse head and shoulders on the daily chart at 1.7920-1.7940 area.

Likely Outlook & Key Scenarios

Primary Scenario (Bullish)

Expect the price to hold above the support levels of 1.7845 or, more importantly, 1.7785.
A subsequent rally to re-test the resistance zone of 1.7920 - 1.7940 is the most likely near-term move.
A decisive break and close above 1.7940 would be the primary trigger for a significant move higher, confirming the inverse Head and Shoulders pattern and targeting the August highs around 1.8080 and beyond.

Alternative Scenario (Bearish Invalidation)

The bullish outlook would be invalidated if the price fails to hold the recent lows. A break and close below the key support at 1.7785 would negate the inverse Head and Shoulders pattern. This would signal that sellers have regained control and could lead to a deeper correction towards the 1.7700 level.

On the Radar

RBA September 2025: Hawkish Tilt vs August

Now that we have the 30 Sept 2025 RBA statement, here’s a side-by-side comparison with the prior (August) statement, highlighting the specific new remarks, data changes, and tone shifts that matter for markets in the short term.

Key Differences: September vs August

Inflation

August: Inflation had eased into the 2–3% band, with underlying momentum lower, helped by rebates and easing pressures.
September: “The decline in underlying inflation has slowed… recent data suggest Q3 inflation may be higher than expected.”
🔹 New: Clearer warning that disinflation is stalling, with upside surprise risk. This is a hawkish tilt, raising doubt about how quickly the RBA will cut again.

Domestic demand & growth

August: Growth outlook was subdued, public demand dominant, consumption weak, risks tilted to downside.
September: “Private demand is recovering… private consumption is picking up as real household incomes rise… housing market is strengthening.”
🔹 New: Stronger domestic recovery narrative. This is a shift away from a purely dovish, weak-growth picture, suggesting easing might not need to be as aggressive.

Labor market

August: Labor conditions softening somewhat, unemployment ~4.3%, some easing in demand.
September: “Labor market conditions broadly steady… unemployment unchanged at 4.2%, underutilization low… wages growth has eased, but productivity weak and unit labor costs high.”
🔹 New: Balanced message — employment growth slowed, but overall labor market remains tight. The mention of unit labor costs high is a hawkish insertion, as it points to sticky wage-price dynamics.

Global risks

August: Emphasized uncertainty, trade headwinds, geopolitical risks, downside to global demand.
September: “More clarity on US tariffs — extreme outcomes avoided, but still adverse effect expected… geopolitical risks remain.”
🔹 New: Slightly more optimistic (less extreme trade risks), but still cautious. Market read: less urgent downside risk, neutral for AUD.

Policy stance / guidance

August: Dovish, emphasized “data dependency,” readiness to act, conditional forward guidance.
September: “Signs that demand is recovering, inflation may be persistent in some areas, labor market stable… appropriate to remain cautious… policy well placed to respond if needed.”
🔹 New: Stronger caution against rushing into more cuts. Less dovish than before, reinforcing a wait-and-see bias.

Summary : Most Market-Moving Phrases

Theme	August Language	September Language	Implication
Inflation path	"Around middle of target"	"May be higher than expected"	🔴 Hawkish
Demand	"Spare capacity emerging"	"Recovering more rapidly"	🔴 Hawkish
Policy urgency	Cut delivered	"Take some time to see effects"	🔴 Pause mode
Future action	Data-dependent	"Remain cautious" + "updating view"	🔴 Higher bar for cuts
Labor market	"Cooling"	"A little tight"	🔴 Hawkish

Tone shift: Compared to August, the September statement is less dovish. It highlights stronger domestic demand, slower disinflation, and sticky unit labor costs.
Implication: This reduces near-term probability of another immediate cut. Markets may pare back November cut expectations slightly.
AUD reaction: Near term (this week and next), AUD likely supported on dips, especially if global risk sentiment doesn’t collapse. AUD currency crosses may see AUD outperformance, while AUDUSD may remain also supported but also more dependent on USD drivers.

Trade Setup

SellEURAUD@ 1.77921

TP Reached

Trade Summary

Entry Price1.77921

Closing Price1.76047

Risk (1.5%)$259.21

Result$1,132.30

Account Impact6.17%

Balance Before$18,349.00

Balance After$19,481.30

Trade Duration9 days

Original Trade and Updates

Trade Parameters

Entry

1.77921

Stop Loss

1.78350

Take Profit

1.76050

Risk

42.9 pips

Reward (TP)

187.1 pips

Risk-Reward

1 : 4.4

Exp. Duration

Short term

Trade Timeline

Trade hit take profit and is now closed.

On the Radar

What to Watch in the Upcoming RBA Policy Decision

Here are specific remarks or data shifts that could mark a significant deviation — and how markets might react:

Topic	What changed remark / data to look for	Likely market impact
Inflation assessment	If the statement upgrades inflation risks (e.g. “inflation has proven more persistent than anticipated,” “we see upside risks from energy, services, import cost pressures”). The August statement notes inflation has eased as expected into the 2-3% range.	That would make the RBA more cautious about cuts and could support AUD strength / flatten AUD weakness
Guidance on future easing / timing	Any stronger language indicating sooner cuts (e.g. “if conditions evolve, we may ease in November / December”) versus previous “hold and monitor”	A more dovish forward guidance helps push rate expectations lower, weakening AUD crosses
Labor market / wage pressures	If the RBA expresses more concern about lingering wage growth or labor market tightness than it did in August. The current assessment is that the labor market has "eased slightly but capacity constraints remain." An upward revision to wage forecasts would be a key trigger.	That would temper markets’ expectations of aggressive easing, giving support back to AUD
Global / external risk language	If the statement amplifies concerns about a global slowdown, particularly regarding China or the impact of US tariffs. The August view was that the risks of a "damaging trade war appear to have diminished somewhat," though the outlook remains skewed to the downside.	Strengthening the external risk narrative supports a cautious or dovish tone; less risk talk would allow more hawkish posture
Electricity rebates & administered price reversal	In prior statement, rebates had depressed headline inflation; if this reversal is flagged earlier or larger than expected, that would suggest inflation could reaccelerate	That could push RBA to delay cuts or remain more restrictive
Change in conditionality / “if” to “when” phrases	If RBA moves from “if economic conditions warrant” to “when” or similarly more deterministic language about cuts.. The August statement is firmly in the conditional camp.	A more committed tone toward cuts would boost market expectations of cuts
Monetary policy reaction function	If they provide a clearer path (e.g. number of cuts, timing) or narrow the range of uncertainty	More clarity leads to more confident market positioning and potentially sharper AUD moves
Q&A tone shift / less equivocation	In the press conference, if the Governor or Board is more definitive (less “depends on data,” more “likely to” or “we expect to”)	That transparency or conviction would strengthen or weaken AUD depending on direction
Forecast or baseline revisions	Upgrades/downgrades to growth, inflation, employment forecasts relative to the last statement. The current forecasts are for GDP growth to reach 2.1% by late 2026, unemployment to stabilize at 4.3%, and trimmed mean inflation to remain around 2.6%.	A more cautious growth outlook might lean dovish; upward inflation revisions might push a more hawkish tilt

Likely scenarios & how they could differ from the last

Given recent developments, here are three possible scenarios:

Base scenario (most likely): The RBA holds at 3.60 %. The statement reaffirms the cautious, data-dependent posture. Slight upward tweaks to inflation risks or external uncertainty may be added, but no strong shift. The press conference is moderate, signaling openness to easing but with caution.
Dovish surprise scenario: The RBA hints that cuts may resume earlier (or states that easing will be more aggressive than markets thought). Also, a stronger downgrade to growth forecasts or emphasis on downside risks. In press conference, Governor leans into accommodative stance.
Hawkish-leaning surprise scenario: The RBA pushes back on market expectations for cuts, emphasizing persistent inflation risk, stronger wages, or tighter labor market. The forward guidance becomes more conditional or delayed. In press conference, there is more hesitation or guarded optimism rather than commitment.