EURAUD Forex Forecast – Trend Line Bounce or Break?

EURAUD Forex Forecast - Trend Line Bounce or Break?EURAUD has been trending lower on its 1-hour time frame, moving below a descending trend line connecting its latest highs. Price is currently testing this resistance area, which lines up with the 61.8% Fibonacci retracement level on the latest swing high and low.
In addition, the 61.8% Fib and trend line coincides with a former support area, which might now hold as resistance. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which confirms that the downtrend could carry on, likely taking EURAUD to the lows at 1.4450 or lower.
Stochastic is still heading up, which suggests that buyers could be in control of price action and could push for a higher pullback. Once the oscillator crosses below the overbought zone, sellers could take the upper hand.
Earlier today, the Australian NAB business confidence index showed a decline from 5 to 4 to show weaker optimism. Meanwhile, Chinese inflation reports beat expectations, renewing support for the Australian dollar. The CPI fell from 1.9% to 1.8% versus the projected fall to 1.7% while the PPI showed a 1.7% year-over-year drop compared to the estimated 2.0% decline and the previous 2.6% fall.
The only release from the euro zone today is the German trade balance, which is expected to widen from 22.2 billion EUR to 23.2 billion EUR. Other medium-tier reports due from the euro zone this week are the French industrial production, Italian trade balance, and final CPI readings from France and Germany.
Event risks for AUD trades include the RBNZ statement and the release of China’s industrial production and retail sales reports later on in the week. A return in risk aversion could mean AUD weakness while stronger than expected data could spur gains for the currency.