EURAUD has been trending higher these days and is moving inside a rising channel on its 4-hour time frame. Price is currently testing the bottom of the channel, which might hold as support and trigger a bounce back to the resistance at 1.6300.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance could still be to the upside. In addition, the 200 SMA lines up with the channel support, adding to its strength as an inflection point.
Meanwhile, stochastic and RSI are both indicating oversold conditions, which suggests that buyers could take over. Bullish divergences can also be seen, as price made higher lows while the oscillators made lower lows.
Earlier today, Australia released the RBA meeting minutes which didn’t trigger such a bearish reaction from the Aussie, even when policymakers kept the door open for additional rate cuts. However, risk appetite appears to be in play as Chinese investors just returned from their Spring Festival holidays.
Yesterday, ECB head Draghi testified before a parliamentary committee on economic affairs, reiterating that they’d might have to reevaluate their QE program in March. He stressed that the central bank won’t hesitate to act if necessary, and that policymakers would base their decision on the impact of falling commodity prices on domestic inflation, as well as the risks from the global financial turmoil.
ZEW economic sentiment figures are due from the euro zone today while Australia has its jobs numbers up for release on Thursday.
By Kate Curtis from Trader’s Way