EURAUD Forex Forecast – Major Correction Underway

EURAUD Forex Forecast - Major Correction Underway
EURAUD Forex Forecast - Major Correction UnderwayEURAUD previously broke below a double top pattern, signaling that a downtrend was in order. Price dipped to the 1.4467 low soon after before showing signs of a pullback after the ECB press conference.
Using the Fibonacci retracement tool on the latest swing high and low shows that the 50% level lines up with the broken double top neckline around 1.5200, which might hold as a resistance level on a pullback. This is also near the 200 SMA, which might add to the strength of the resistance zone.
The 100 SMA is below the 200 SMA, indicating that the downtrend could carry on. Also, the 100 SMA is near the 38.2% Fib, which seems to be keeping gains in check for now. Stochastic is on the move down with a slight bearish divergence while RSI is also pointing south, indicating that sellers are regaining control.
The ECB decided to cut several interest rates and announce and expansion of their quantitative easing program from 60 billion EUR monthly asset purchases to 80 billion EUR, driving the euro lower against its forex peers during the actual statement. However, the press conference that followed triggered a sharp rally when ECB head Draghi said that they have no plans of cutting rates further in the near future.
Earlier in the day, data from China came in stronger than expected, giving the Aussie additional support. The Chinese CPI improved from 1.8% to 2.3% while the PPI showed a smaller decline of 4.9% in producer prices compared to the earlier 5.3% slump.
There are no major reports lined up from both Australia and the euro zone today, which suggests that the trends might resume. Still, data due from China over the weekend namely industrial production, retail sales, and fixed asset investment might result to weekend gaps for AUD.
To contact the reporter of the story: Samuel Rae at

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