Daniel Been, Senior FX Strategist at ANZ, recommends buying EUR/AUD at 1.60, with a stop at 1.58 and take profit at 1.66. Key Quotes “Fed Chair Janet Yellen will present a semi-annual testimony to congress. Given the recent volatility in markets, and the recent decision from the BoJ to shift to negative rates, market expectations around the Fed have become very dovish. With barely one hike now priced in over the next twelve months, the risk/reward favours a disappointment for the doves. Looking at the US data, we do not see sufficient evidence that the weakness offshore is spilling broadly into the economy. The labour market outcomes are still strong, with wages rising, quit rates improving, and small businesses saying labour is getting increasingly difficult to source. We think that this backdrop sets a good scene for the AUD to retest below USD0.70. That said, we think that a long EUR/AUD trade is the best risk/reward way too play for a more hawkish surprise. If we are wrong, a stronger EUR will likely cushion some of the losses on the short AUD position, while a more hawkish statement will likely drive deterioration in risk sentiment. In recent months, this has resulted in significant upside for EUR/AUD. We recommend buying EUR/AUD at 1.60, with a stop at 1.58, and take profit at 1.66.” For more information, read our latest forex news.