EUR/AUD: Lower Valuations Well Justified

Anyway you slice it, the exchange rate looks set to stay under pressure this Monday, unless a fundamental-driven event disallows it. The intermarket flows are unambiguously supportive of the downside as the micro bearish slopes in the Yuan (inverted), equities (inverted) and the German vs Australian 10y yield spread demonstrate. Moreover, the technicals are in favor of the downside, with the breakout of the previous swing low at 1.5785-90 creating a successful rotation lower, which is likely to attract further sell-side momentum-led flows to capitalize on this ongoing supply imbalance.