EURAUD Forex Forecast – Pullback to Broken Support?

EURAUD broke below support at the 1.4550 minor psychological level then dipped to the 1.4400 area before pulling up. Using the Fib tool on the latest swing high and lows shows that the 61.8% retracement level coincides with the broken range support, which might now hold as resistance.
The 100 SMA is below the longer-term 200 SMA on the 4-hour time frame, signaling that the path of least resistance is to the downside. The gap between the moving averages is widening, which means that bearish pressure is getting stronger.
Stochastic is on the move up for now, which means that buyers might be in control of price action, but the oscillator is nearing the overbought region. Once it turns lower from that area, selling momentum could return and allow any of the nearby Fib levels to keep gains in check.
There were no major reports out of the euro zone and Australia last Friday but China’s inflation reports came in stronger than expected, providing support for the Australian dollar. Earlier in the week, though, trade data from China showed a sharp decline in both exports and imports so demand for Australia’s raw material commodities could weaken.
Euro zone final CPI readings are up for release today, along with a speech from ECB Governor Draghi. This might set the tone for the ECB interest rate statement on Thursday, although no actual changes to monetary policy are expected. Still, policymakers are expected to address rumors that the central bank is considering winding down its asset purchases ahead of the program’s end date.
As for Australia, the RBA minutes are up for release and this should provide more insight on whether or not the central bank would still adjust interest rates this year. Later in the week, Australia’s job figures are up for release and a 15.2K increase in hiring is eyed.
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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.