Technical Bias: Neutral
Key Takeaways
• Euro surged higher against the Aussie dollar recently as the latter one got sold aggressively.
• 1.4370 is a short-term important support level, which if breached could ignite losses in the EURAUD pair.
• EURAUD support seen at 1.4370 and resistance ahead at 1.4430.
The EURAUD pair is at clear risk of a reversal, as the momentum has started fading and the Aussie dollar is reaching a critical support area against most major currencies.
German PPI
Earlier during the London session, the German Producer Price Index was released by the Statistisches Bundesamt Deutschland. The market was expecting the German index of producer prices for industrial products in August 2014 to fall by 0.8%, compared to the same month of the previous year. The outcome was as expected, and the monthly change reading was also in line with the forecast of a 0.1% decline. The Euro traded slightly lower during the London session, and managed to hold the 1.2880 support area.
Technical Analysis
There is a monster trend line on the hourly chart of the EURAUD pair, which held the downside in the pair on a number of accessions and pushed it back up. However, the risk of a breakdown is increasing, as the Euro buyers are unable to take the pair higher. There is a critical resistance around the previous high of 1.4432. If the pair fails one more time to break it, then the chances of a break lower would increase in the short term.
A break below the highlighted trend line might call for more losses towards the 23.6% fib retracement level of the last leg from the 1.4007 low initially, which also coincides with the 100 hourly simple moving average. Any further downside acceleration might take the pair towards the 200 hourly moving average, which is sitting around the 50% fib level.
