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EUR/AUD has trended firmly lower since November 2020, with the aussie benefiting more than the euro from increased confidence in the global vaccine rollout and the greater fiscal support of the Biden administration. Therefore, economists at Westpac expect the pair to trade at 1.49 by end-2021.  

Key quotes

“Any bounces to 1.5600 may be a selling opportunity. The EU continues to struggle with both the current spread of COVID-19 and the vaccine rollout. An increase in new cases in Q1 has prompted renewed activity restrictions in e.g. Germany, France and Italy.”

“To be sure, the EU will eventually improve its virus management. But AUD’s relative appeal extends beyond COVID-19 outperformance. Once the global recovery becomes more synchronised in H2 21, AUD’s leverage to industrial growth should underpin gains on crosses.”  

“Our base case is 1.51 mid-year, 1.49 year-end.”