EURAUD Forex Forecast – Correction to Broken Resistance

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EURAUD Forex Forecast - Correction to Broken Resistance

EURAUD Forex Forecast - Correction to Broken Resistance

EURAUD recently surged past the key resistance around 1.4650 minor psychological level and climbed near the 1.4800 mark. From there, price showed signs of a correction and the Fibonacci retracement tool shows that the 38.2% level lines up with the broken resistance.

The 100 SMA just crossed above the long-term 200 SMA, suggesting that the climb could carry on. A bounce off the 38.2% Fibonacci retracement level or any of the Fibs could lead to another test of the resistance at 1.4800 and perhaps a move higher.

RSI is on the move down, confirming that euro sellers are in control of price action for the time being and could lead to a test of the area of interest. Meanwhile, stochastic is nearly in the overbought zone and looks ready to move back down.

EURAUD Fundamental Factors

The result of the Greek referendum could continue to weigh on the euro for the next few days, as the region faces more uncertainty when it comes to the country’s membership in the euro zone and the stability of the shared currency.

However, the Aussie is also under selling pressure, thanks to falling commodity prices and the slump in China’s equity market. The government just announced some measures to pare the stock market losses over the weekend but it remains to be seen whether these are enough to restore consumer confidence.

Later on in the week, Australia is set to release its jobs report and possibly show a weaker increase in hiring. This could lead to further losses for the Australian dollar, as traders start pricing in a potential interest rate cut from the RBA.

Overall, market sentiment is favoring the lower-yielding currencies against the higher-yielding ones. Further declines in China’s equity performance could mean significant declines in export demand, which would harm Australia’s raw material exports and mining production. This could lead to weaker economic performance for the Land Down Under.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.