An FX reversal pattern can be seen on EURAUD’s 1-hour time frame, indicating that a short-term rally might take place. Price created a double bottom pattern after failing in its recent attempts to break below the 1.4400 major psychological level.
The pair appears to have broken past the neckline around the 1.4500 major psychological resistance and may be in for around 150 pips in gains, which is around the same height as the chart pattern. This could take EURAUD up to the 1.4650 minor psychological resistance before traders book profits.
FX Reversal Levels
This FX reversal during the Asian session was spurred by news that copper prices have fallen to new lows, putting weight on the commodity-dependent Australian dollar. Bear in mind that their economy relies heavily on copper exports, with lower prices dampening profitability.
There are no other top-tier event risks lined up for this FX reversal setup for the rest of the day, as the only report due from the euro zone is its industrial production reading. A flat reading is eyed, although a sharp decline might force the shared currency to return its recent gains.
As for the Australian dollar, price action could hinge on risk sentiment for the rest of the day but the path of least resistance is to the downside. US retail sales figures might impact market sentiment later on, with stronger than expected data likely to revive demand for higher-yielding and riskier currencies.
On the other hand, weak data could allow the Aussie’s selloff to carry on, possibly taking EURAUD beyond the 1.4650 mark. Do stay tuned for any updates regarding the Greek snap election though, as increased odds of seeing a new government could mean more instability for the country. This could revive talks of a Greek exit from the euro zone and remind traders that debt contagion is still possible.
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