EURAUD is trending lower and moving inside a descending channel connecting the highs and lows of price action since the latter part of May. Price is bouncing off the channel support and could be due for a pullback to resistance. Stochastic is moving up to show that buyers are in control of price action but the oscillator is already dipping into the overbought region to signal potential rally exhaustion.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level is closest to the channel resistance around the 1.4850 minor psychological mark. The 100 SMA is above the longer-term 200 SMA for now so the path of least resistance is still to the upside, but a new crossover seems likely and this might draw more sellers to the market.
If any of the Fib levels hold as resistance, price could make another test of the channel lows at 1.4400. On the other hand, sustained buying pressure could spur a break past the channel resistance and start a reversal for EURAUD.
The ECB decided to keep monetary policy unchanged as expected while reiterating that tapering has not been discussed yet. During the presser, Draghi repeated that inflation is not quite up to the level that they’d like to see just yet before trimming asset purchases. He did say that they’re seeing broadening signs of growth but that these have yet to translate to stronger price pressures.
Meanwhile, the Aussie took some hits upon seeing slightly weaker than expected jobs data. The economy added 14K jobs in June versus the projected 14.4K figure and the previous reading was downgraded from 42K to 38K. The jobless rate was unchanged at 5.6%. A couple of RBA policymakers are set to give testimonies today and jawboning remarks are expected.
By Kate Curtis from Trader’s Way