EURAUD is currently making a correction from its recent uptrend but it looks like the pullback might draw support soon. Price is nearing the broken resistance at the 1.4700 major psychological level, which is near the trend line and the 50% Fibonacci retracement level.
If this area holds as support, the pair could climb to its previous highs around the 1.5100 major psychological mark or higher. Stochastic is already indicating oversold conditions and might be ready to climb higher, as it also formed a bullish divergence from the previous low around the start of the month. RSI is also moving out of the oversold area, suggesting a pickup in buying pressure.
The moving averages are also near the trend line and are holding as dynamic support levels. The 100 SMA is treading above the 200 SMA, confirming that the ongoing uptrend could carry on. A break below the trend line and moving averages, however, could be an early signal that a downtrend is set to take place.
EURAUD Fundamental Factors
The main event risk for this EURAUD setup is the Greek parliament meeting today, as the lawmakers are set to either reject or accept the latest bailout proposal. Note that this was already approved by Greece’s creditors since it contained stricter austerity measures, but this could be rejected by members of the parliament since it might push the country deeper in recession.
Earlier today, data from both China and Australia indicated improvements, keeping the Australian dollar supported. China’s GDP reading showed 7.0% quarterly growth, in line with analysts’ expectations, while retail sales and industrial production beat forecasts. In Australia, new motor vehicle sales showed a 3.8% rebound while the Westpac consumer sentiment index marked a slower pace of decline.
Further conflict in Greece could mean more losses for the euro, as this would remind traders that a Grexit is still possible and that the stability of the shared currency could once again be put in question.
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