EUR/AUD: A Quiet RSI Signal Challenges the Downtrend

[FXOpen]

The euro enters this week's ECB meeting (September 9–10) with genuine hawkish backing, having already been told by insiders that policymakers are prepared to raise rates again to counter the inflationary side-effects of the Middle East conflict, even as they signal little appetite for tightening beyond that. July's hold at 2.25% came with Lagarde explicitly warning that renewed hostilities and the resulting oil price rebound pose upside risks to the inflation outlook, keeping the door firmly open to a move back to 2.50% this week.

The Aussie, meanwhile, is riding one of its strongest stretches in months, hitting a fresh three-month high after Q2 GDP beat expectations at 0.4% quarter-on-quarter, reinforcing bets that the RBA could resume tightening this month. Markets now price a 50–58% chance of a September hike, with a November move seen as effectively locked in, while commodity strength and Australia's growing role in the AI infrastructure boom add further structural support to the currency.

The result: two hawkish central banks converging on rate decisions within days of each other, leaving EUR/AUD's next move to hinge on whether Frankfurt or Canberra delivers the more convincing signal.

Technical Analysis of EUR/AUD​

As the EUR/AUD chart shows, the pair has been trading within a steep descending trendline since mid-August's highs near 1.6441, with price now testing the confluence of this trendline and the 0 Fibonacci level near 1.6086. Adding intrigue to the setup, the RSI is forming a bullish divergence, printing higher lows even as price carved a fresh low this week.

Bullish Scenario

Should buyers break above the descending trendline, the divergence would gain real technical credibility, opening the path towards the 0.382 retracement near 1.6222, with a stronger move potentially targeting the 0.5 level around 1.6264.

Bearish Scenario

Conversely, a continued rejection at the trendline would keep sellers in control, invalidating the divergence and exposing fresh lows below the 1.6086 level, with the broader downtrend from August's highs remaining firmly intact.

With price testing a fresh low right at the trendline while the RSI quietly hints at fading downside momentum, EUR/AUD looks poised for a decisive reaction. Will the ECB's hawkish stance finally show up on the chart, or will the RBA's own tightening momentum keep this downtrend alive?

 

[JulianCraft]

RSI divergence looks cute on a chart, but good luck buying the Euro when the ECB is hiking purely because of an energy shock. That's not a strong economy, that's stagflation. Both these central banks are just blindly hiking into a massive global slowdown to fight cost-push inflation, and it's going to end badly for both sides eventually. I definitely wouldn't be trying to catch a falling knife on EUR/AUD based on a single oscillator signal.

 

[Liam Walker]

Honestly everyone is staring way too hard at the ECB and RBA headlines like they actually matter right now. While half the forum is trying to guess if Lagarde is going to out-hawk the RBA, I'm quietly fading this whole RSI divergence setup and looking to short the absolute pants off any little relief bounce back toward 1.62. Everyone wants a hero trade here, which usually means the exact opposite is about to happen.