AUD/EUR: The Opportunity Traders Are Ignoring in Forex

When it comes to trading in currency markets, most traders focus on major pairs. However, the Australian dollar against the euro presents an interesting alternative that deserves more attention than it currently receives.

Why Are the Australian Dollar and the Euro an Attractive Pair?

The AUD/EUR is classified as a minor pair within Forex, but this does not mean it is less profitable. In fact, the trade relationship between Australia and the Eurozone provides characteristics that many traders seek: adequate liquidity and controlled volatility.

The Australian currency (AUD), official since 1966, is currently used in Australia, Christmas Island, Cocos Islands, and other territories. Its banknotes, made with polymers since the 1990s, are innovative and difficult to counterfeit. The most common denominations range from 5 to 100 AUD in banknotes, with 1 and 2 AUD coins being more fractional.

On the other hand, the euro (EUR) remains the second most important currency worldwide, used by 19 of the 27 European Union members since its implementation in 2002. Its institutional backing comes from the European Central Bank (ECB) and the European Commission. Banknotes circulate from 5 to 500 EUR, made of cotton, giving them a distinctive feel.

The Trade Relationship: The Fundamental Factor

Australia considers the EU its second most important trading partner, only behind China. This constant trade flow injects natural liquidity into the AUD/EUR pair.

Key data of the relationship:

• Over 2000 European companies operate in Australia, generating 500,000 jobs
• Australian exports amount to approximately 200 billion euros annually
• Main exports: mineral products, agricultural products, and commercial services
• Both economies have an active free trade agreement

In terms of value, as of November 30: 1 AUD equals 0.65 EUR, meaning 1.54 AUD are needed to obtain 1 EUR. This reflects that the euro has greater relative strength in the market.

Technical Analysis Reveals Clear Signals

Looking at the daily chart of the Australian dollar against the euro during 2022, we can identify patterns that respect charting principles:

Key movements:

• Peak reached in February: 1.6228
• Support broken at 1.53 during the downward transition
• Season’s low in August: 1.4282
• Current quote: 1.5317 (reflects recovery)

Important technical signals: The pair has recently formed a Golden Cross, indicating a trend reversal to bullish. Three consecutive rebounds at the same resistance level suggest accumulation. The 50 and 200-day moving averages act as predictable bounce zones.

The stochastic has shown multiple overbought and oversold situations. Traders combining these confluences have higher success probabilities.

Economic Events: The Guide for Decisions

To operate the AUD/EUR, it is essential to monitor the economic calendar. Both central entities (Reserve Bank of Australia and ECB) publish decisions that directly impact the pair’s movements.

What to follow:

• ECB interest rate decisions (currently 2.00%)
• Reserve Bank of Australia rate decisions (2.85%)
• Retail sales data in Germany and Europe
• Speeches by central governors
• Inflation and employment reports

A data release below expectations typically weakens the respective currency. For example, if German reports are worse than forecast, the euro weakens against the Australian dollar.

Trading Strategies: From Theory to Practice

For position traders: Historical analysis shows long-term opportunities. In October 2021, a Death Cross formed, signaling sell opportunities. When support at 1.53 was broken during February 2022, three clear entry opportunities at resistance emerged. The third was more profitable because it confluenced: stochastic overbought, resistance level, and long-term EMA as additional support.

For scalpers: It is critical to verify spreads, commissions, and broker execution speed. Every pip matters in this strategy, as does latency on the platform.

For swing traders: Consider overnight financing (swaps), available leverage, and required margins to maintain multiple positions without automatic closure risk.

Annual Variation and 2022 Outlook

The AUD/EUR pair recorded an annual variation of -2.1%. It started 2022 at 1.5657, reached a maximum of 1.6228, a minimum of 1.4282, and closed at 1.5317. This moderate volatility is precisely what attracts systematic traders.

Practical Recommendations for Operators

Before risking real capital:

• Practice on a demo account until mastering technical and fundamental concepts
• Test different strategies without financial pressure
• Familiarize yourself with indicators and platform tools
• Set clear entry and exit rules

During active trading:

• Seek the maximum number of confluences before executing orders
• Avoid speculation without technical or fundamental basis
• Improve reading of the economic calendar
• Adjust strategy according to trader type (scalper, swing, position)

Critical point: Few brokers actively handle AUD/EUR because they consider EUR/AUD as the dominant direction. However, operationally it is the same: if you buy AUD/EUR, it is equivalent to selling EUR/AUD. The choice depends on broker availability and personal comfort.

The Australian dollar against the euro remains an underestimated pair. With rigorous technical analysis, understanding of fundamental events, and disciplined strategy, it can be as profitable as any major Forex pair.