EUR/AUD Will Continue Rallying, Especially If Emmanuel Macron Wins

EUR/AUD did not reach the limit of its divergence and close the gap as I thought it would. Actually the correction was pretty shallow – only 200 pips, after which the pair continued moving north, climbing with another 400 pips, from 1.45013 to 1.49104.

On Sunday is the run-off election between Emmanuel Macron and Marine Le Pen in France, which will likely be won by the former as the EU hopes, and that will likely give the required fundamental push to the EUR so I think we will see this pair rally again. On the other hand, if Marine Le Pen wins despite the polls that predict that she won’t, we could see the EUR drop in an unprecedented manner.

What is the technical analysis picture?

On the monthly time frame there is a strong resistance, and on the daily one we can see a pennant that the pair has broken out above and there is about another 500 pips until it reaches its limit. If it breaks out above 1.4850 – 1.4900, I think we could expect a rally to 1.5300 or even higher than that.

On the monthly time frame we can also see an inverted hammer bar right below the support at 1.40. Such a formation is a signal for a long-term rally, which also supports my analysis.
So from a technical analysis point of view the move north appears more likely.