EURAUD has been trading sideways recently, finding support at the 1.5650 minor psychological level and resistance near 1.5800. Price just bounced off the top of the range and might be due for a test of support again soon.
The 100 SMA is above the longer-term 200 SMA on the 1-hour time frame to signal that the path of least resistance is to the upside. However, the gap between the moving averages is narrowing to reflect weakening bullish pressure. A downward crossover could bring more sellers back in.
Stochastic is also on the move down to show that sellers have the upper hand, but the oscillator is nearing oversold levels to signal that bearish presure is weakening and that a bounce off support may take place soon.
There were no major reports out of the euro zone yesterday but the shared currency managed to hold on to most of its gains and go for more. As for Australia, the NAB business confidence index improved from 10 to 12 to reflect more optimism.
Today has German and Italian preliminary GDP figures due early in the London session before the region’s flash GDP reading is printed. Analysts are expecting to see another 0.6% expansion, but a stronger than expected read could boost ECB tightening expectations.
There are no reports due from Australia today as its next major report is the employment change for January due on Thursday’s Asian session. Analysts are expecting to see a 15.3K increase in hiring for the month, lower than the earlier 34.7K gain, and no change in the 5.5% jobless rate.
By Kate Curtis from Trader’s Way