EURAUD Forex Forecast – Ready to Test Channel Resistance?

EURAUD Forex Forecast - Ready to Test Channel Resistance?EURAUD has been trending lower on its short-term and long-term time frames, but a potential opportunity to catch the downtrend has materialized on the 4-hour chart. Price is bouncing of the descending channel support and might be due for a pullback to the top of the channel around the 1.4700-1.4750 levels. This lines up with the 61.8% Fibonacci retracement level and an area of interest.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, stochastic is still on the move up so buyers may be in control for now. If bullish momentum continues to stay in play, EURAUD could go for a break past the channel resistance and head towards the dynamic resistance at the 100 SMA or 200 SMA. On the other hand, if any of the Fib levels or the channel resistance hold as a ceiling, price could resume its drop to the lows at 1.4500 or create new ones.
Earlier today, Australia reported a 7.9K increase in hiring, lower than the estimated 10.1K rise in employment. The jobless rate rose from 5.7% to 5.8% as expected, but this was due to a slight increase in labor force participation.
Data from the US economy was mixed yesterday, as the Fed Beige Book indicated that most districts saw modest economic growth and a pickup in consumer spending. Import prices posted a smaller than expected 0.2% uptick versus the projected 0.6% climb.
For today, the US is set to print its initial jobless claims and PPI. Jobless claims could come in at 263K, higher than the previous 254K figure, while producer prices could see a 0.3% uptick. Tomorrow, US retail sales and CPI are up for release. Headline consumer spending could show a 0.1% uptick while core retail sales could see 0.4% growth. Headline and core CPI are expected to show 0.2% gains.
Chinese top-tier reports are also up for release tomorrow and slightly weaker figures are eyed. GDP could fall from 6.9% to 6.8% while industrial production, retail sales, and fixed asset investment could also slow down, possibly weighing on the Aussie.
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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.