EURAUD has been trading sideways recently, moving inside a range between support at the 1.4450 minor psychological level and resistance at the 1.4525 area. Price seems to be on its way to test the top of the range from here.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This suggests that the range resistance could hold and push price back to the bottom once more. Stochastic is also heading lower after briefly reaching the overbought area, signaling that sellers are taking control of price action.
A strong move past the range support or resistance could start a longer-term trend for EURAUD. The range is approximately 75 pips tall so the resulting breakout could be roughly the same size.
Earlier today, China printed weaker than expected figures, likely dampening demand for Australia’s raw material commodity products later on. Industrial production was down from 6.2% to 6.0% year-over-year in July while fixed asset investment fell from 9.0% to 8.1% year-to-date. Retail sales also slowed from 10.6% to 10.2% year-over-year in July.
Preliminary GDP readings from the top euro zone economies and the entire region are up for release today. Germany is set to print a 0.3% growth figure, slower than the previous 0.7% expansion, while the euro zone flash GDP could hold steady at 0.3%.
Euro zone industrial production data and final CPI readings from Germany are also lined up. Euro zone industrial production could recover 0.6% from the previous 1.2% slide while no revisions are expected for the German final CPI reading.
By Kate Curtis from Trader’s Way