EURAUD has been on a steady uptrend since April, with a rising trend line connecting the recent lows on the 4-hour time frame. Price seems to be hitting resistance at its current levels and may be due for a correction to the rising support area.
In addition, the trend line coincides with the 200 SMA, which has held as a dynamic support area in the past. The short-term 100 SMA is above the longer-term 200 SMA for now, confirming that the path of least resistance is to the upside.
At the same time, stochastic is approaching the oversold region, which could signal euro buyers to take control of price action. RSI is still on the move down, suggesting increased selling momentum and even a potential breakdown from the rising trend line.
EURAUD Fundamental Factors
The PBOC’s yuan devaluation efforts are currently dragging commodity currencies down, as this could put downward pressure on demand and price levels. While a cheaper local currency would make exports relatively more affordable and imports more expensive, it might wind up hurting Chinese demand for raw material commodities from Australia.
Meanwhile, euro bulls are still ecstatic that Greece has finally sealed the deal for a third bailout. This could allow the debt-ridden nation to stay in the euro zone for much longer and avoid defaulting on its loan obligation to the ECB on August 20.
Data from the euro zone has been disappointing, however, as the region’s industrial production numbers missed expectations yesterday. For today, French and German final CPI readings are on tap and strong data could set off more gains.
Earlier today, Australia reported a climb in its MI inflation expectations index, allowing the Aussie to regain a bit of ground and push EURAUD closer to the trend line. However, a strong surge in euro demand could allow the rally to resume before an actual test of the trend line takes place.
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