EUR/AUD Reversal Risk Builds as Bearish Momentum Aligns With Historical Tops

EUR/AUD may be setting up for another significant reversal, mirroring historical peaks in 2008 and 2020. Recent technical developments—across monthly, weekly, and daily timeframes—point to growing downside risk for the euro against the Australian dollar. With momentum waning, false breakouts fading, and lower volatility paving the way for trend shifts, traders should be alert to potential bearish continuation patterns forming across this key cross.

View related analysis:

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Bearish Technical Signals Strengthen Case for EUR/AUD Reversal

Back in April, I highlighted how the surge in EUR/AUD resembled previous major market tops seen in 2008 and 2020. In both instances, the euro spiked sharply against the Australian dollar before giving up much of those gains by the end of the month—and we saw a similar reversal pattern unfold this April.

I still stand by that view: it seems more likely that EUR/AUD breaks beneath its April low before making a new high. Recent price action on lower timeframes also hints at a possible bearish inflection, with momentum faltering and divergence building.

Chart analysis by Matt Simpson - data source: TradingView EUR/AUD

EUR/AUD Technical Analysis: Euro vs Australian Dollar Weekly Chart

The bearish engulfing candle that formed on EUR/AUD last week marked the largest high-to-low range in 10 weeks, suggesting a potential swing high against the Australian dollar. Crucially, this reversal followed a false breakout above the 1.08 handle—a previously flagged bullish target—adding further weight to the developing bearish bias for the euro.

Assuming last week’s price action concludes wave 'B' of an ABC correction, EUR/AUD may now be entering wave 'C'. If wave C mirrors wave A in length, the euro-to-Australian dollar rate could fall towards 1.6800. A more conservative scenario based on a 61.8% projection would target the May low at 1.7248, which also coincides with the 50% Fibonacci retracement level. Even a modest correction toward the 38.2% retracement brings the 1.7568 level into view.

Chart analysis by Matt Simpson - data source: TradingView EUR/AUD

EUR/AUD Technical Analysis: Euro vs Australian Dollar Daily Chart

EUR/AUD is currently consolidating just above the May trendline, and may continue to do so given the currently low levels of market volatility. For now, this range-bound behaviour offers bears two possible setups: fade into rallies towards the 1.7900 level with a stop above 1.8000, or wait for a confirmed break below last week’s low to assume bearish continuation—consistent with the broader bearish outlook from higher timeframes.

Chart analysis by Matt Simpson - data source: TradingView GBP/AUD

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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