EURAUD might be starting a consolidation pattern on its short-term time frame, as price is finding support at 1.4500 and testing resistance at 1.4700. The top of the range is keeping gains in check for now, which might mean that a move back towards support is in order.
Stochastic is moving down, supporting a potential selloff towards the bottom of the range. RSI is also heading lower and suggesting that sellers are in control of price action at the moment.
Meanwhile, the short-term 100 SMA just crossed below the longer-term 200 SMA, hinting that a downtrend might take place. This could even lead to a break of the range support and a potential 200-pip drop, which is the same height as the rectangle chart pattern.
EURAUD Fundamental Factors
The Australian dollar has been in a weak spot these days, as the RBA minutes confirmed that they’d keep monetary policy accommodative and that they’d like to see more losses for the Australian dollar. Emphasis on this and confirmation by economic data could lead to an upside break for this pair later on.
However, the standstill in the Greek debt talks is also weighing on the euro these days, as traders are starting to entertain the idea of a default and a potential exit from the euro zone. This could also be negative for the entire region, as the stability of the shared currency would be put in question.
Talks are set to resume in the Eurogroup meetings today and the lack of any deal could lead to a selloff for the euro. Moreover, an announcement that the debt-ridden nation would be unable to meet its payments this month might lead to talks of default and a Grexit, putting more weight on the euro and sparking a long-overdue selloff for most euro pairs.
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