There are two types of advertising services on the website — direct advertising or partner (broker) participation programs. However, no services purchased by our partners shall affect the recommendations on our website, or our opinions, or ratings. Our ratings are based on our objective rating criteria and methodology; and the results are always equally and fairly applied to each broker. The work of our content authors and research groups does not involve any interaction with our advertisers and they do not have access to data concerning the amount of advertising purchased. For over 10 years we consider our independence, absolute openness, and objectivity as our main priority. This will help Tradersunion.com to continue to provide our services to you for free.
- When scalping EUR/AUD, traders usually identify the pair’s general trend and trade this trend.
- Currency correlation refers to the relationship between two currency pairs and how they move in relation to each other.
- Some currency pairs are perfectly synchronized dancers, moving in harmony.
- Understanding these relationships helps you predict market movements more accurately.
- With a good trading strategy, you can leverage the pair’s characteristics to potentially make a good income with minimal risk.
Swing trading with probability analysis
The Australian and New Zealand economies are closely linked, and both countries export similar commodities, such as dairy, meat, and minerals. The AUD/USD is a popular currency pair in the Forex market, also known as the “Aussie” and “Kiwi” respectively. The AUD/USD is widely traded due to its high liquidity and volatility, making it a popular choice among traders.
Because of the pair’s reaction to short-term market changes, EUR/AUD is suited to a multi-trade strategy that attempts to accumulate small profits instead of one large gain. This strategy, where a trader holds positions for short periods in a bid to make profits from many small trades, is known as scalping. In addition to the probability analysis, it’s also a good idea to pair your swing trading strategy with big stops. When using the swing trading theory and simple moving averages as the basic trading strategy for EUR/AUD, it’s prudent to add in some probability analysis.
Key data points
When one pair rises, its correlated counterpart typically follows suit, and vice versa. This oversight costs them money and missed opportunities every single trading day. When AUD/USD drops during risk-off sentiment, NZD/USD typically mirrors the decline. Understanding correlation helps you make smarter choices to manage your risk.
EURAUD analysis
The Japanese Yen (JPY) is a safe-haven currency, which means that it tends to rise during times of market uncertainty. However, the AUD/USD does not exist in isolation, and its price movement is affected by a range of economic, political, and social factors. One of the most crucial factors that influence the AUD/USD is the correlation it has with other currency pairs. Over time, the Australian dollar has shown a strong positive correlation to the global equity markets, i.e. the dollar normally strengthens when the equity markets rise, and vice versa.
- In nominal terms (GDP), the EU economy is the second-largest economy in the world, after the U.S. economy.
- A correlation coefficient of +1 shows that two currency pairs will move in the same direction 100% of the time.
- For over 10 years we consider our independence, absolute openness, and objectivity as our main priority.
- Let’s say you go long two currency pairs that move in the same way such as EUR/USD and GBP/USD.
Our trusted Broker
Similarly, market fundamentals related to Australia’s gold production may also play a part in the longer-term valuation of EUR/AUD. The AUD/USD is highly correlated with the NZD/USD and negatively correlated with the USD/CAD and USD/JPY. Therefore, any significant changes in global risk sentiment can impact the JPY and the AUD in different ways. For example, if there is a global economic downturn or a geopolitical crisis, it can lead to a rise in the JPY and a fall in the AUD/USD. Correlation is a statistical measure that indicates the degree to which two assets Euraud correlation move in tandem. In Forex trading, correlation is used to identify pairs that move in the same direction, pairs that move in the opposite direction, and pairs that have no correlation at all.
The Australian dollar experiences the most trading volume during the Asian trading session. An optimum time to trade EUR/AUD will likely be when the Asian and London sessions overlap between 8 am and 9 am GMT. The strong relationship between gold and the Australian dollar has a substantial impact on EUR/AUD fluctuations.
EUR/AUD forecast for today by Traders Union analysts
Therefore, any significant changes in oil prices can impact the CAD and the AUD in different ways. For example, if the price of oil increases, it can lead to a rise in the CAD and a fall in the AUD/USD. The economies of Australia and the European Union (EU) are different both in terms of size and scope. The EU is the world’s second-largest economy and it relies heavily on the region’s service sector, which makes up the majority of GDP.
The Diversification Strategy
Historically, the value of the Australian dollar has followed Australia’s main commodity export prices. For example, this trend can be seen with iron ore, which happens to be Australia’s biggest export. Besides being Australasian countries and key trade partners, both New Zealand and Australia’s economies heavily depend on exporting commodities.
In conclusion, the AUD/USD is a popular currency pair in the Forex market that is affected by a range of economic, political, and social factors. The correlation it has with other currency pairs is an essential factor that traders need to consider when making trading decisions. By understanding the correlation between currency pairs, traders can make more informed trading decisions, manage their risk effectively and potentially increase their profits.
EUR/AUD bulls unwind longs
For instance, understanding how the Australian dollar interacts with other currencies and how the currencies impact the volatility of the Australian dollar can help with hedging. However, their correlation patterns can shift rapidly during economic uncertainty. Smart traders use correlation to manage risk better, avoid overexposure, and identify high-probability setups that others miss. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey.
It is suitable for novice traders who prefer conservative or moderate Forex trading strategies. Any information or advice contained on this website is general in nature only and does not constitute personal or investment advice. You should seek independent financial advice prior to acquiring a financial product. All securities and financial products or instruments transactions involve risks. Please remember that past performance results are not necessarily indicative of future results.