EUR/AUD holding onto intraday lift following Aussie stumble

• Aussie waffles against the Euro as Yuan rate adjustment reverses flows.
• Thin schedule for Tuesday will see market sentiment in the driver’s seat.

The EUR/AUD climbed in Asia trading, spiking to 1.5443 before bedding back down to a bullish 1.5435 and the pair is now leaning back into Monday’s decline.

The Aussie recoiled in early Tuesday after China set the Yuan benchmark over the 6.4 level for the first time since June of 2017, sending the Antipodeans lower across the board as risk flows sent traders into safe havens and punished the riskier assets.

Tuesday brings little of note for either currency on the macro calendar, and market flows continue to drive the broader market in a quiet week. The Italian political struggle could hamper the Euro looking forward as the failed government formation could see another round of elections acting as a proxy for public confidence in the Euro, but the Aussie continues to slump against most of its peers, struggling to develop bullish momentum against a backdrop of middling economic growth.

EUR/AUD levels to watch

The pair has been in a steady decline for the month of May, falling from the month’s peak near 1.6050 and marking in a three-month low at 1.5371 in Monday’s bearish outside candle. Bears will have to force the pair back below immediate support at today’s low near 1.5395, while bulls will want to push past Monday’s high at 1.5495 to invalidate the bearish outside signal.