Technical Bias: Bearish
Key Takeaways
• Euro continued to move lower against the Australian dollar, as carry trade currencies were bid across the board.
• A critical bearish trend line acting as a barrier for buyers.
• EURAUD support seen at 1.0830 and resistance ahead at 1.0880.
The Euro registered new weekly lows against the Australian dollar, as sellers continue to push the EURAUD pair lower.
Technical Analysis
There is an awkward channel forming on the hourly timeframe for the EURAUD pair. The channel resistance trend line has acted as a selling zone on many occasions. Currently, the channel resistance lies around the 1.4450 level, which also coincides with the 100 hourly simple moving average. Moreover, the 23.6% Fibonacci retracement level of the last drop from the 1.4750 high to the recent low of 1.4358 also sits around the same level. So, if buyers manage to take the pair higher towards the channel resistance zone, then they might struggle to break the same. A break and close above the channel resistance might put the pair in the bullish zone, and in that case, it might eye at least the 50% fib level of the recent wave. One important thing to note here is that the 50% fib level also coincides with the 200 hourly SMA. So, it might present sellers an opportunity to take control from the mentioned fib level.
Retest of Lows?
Currently, the pair is struggling to break the 50 hourly SMA, which could result in a drop moving ahead. If the pair fails to climb from the current level, then a move back towards the last low is certainly possible in the short term. If sellers gain control, then a break of the last low could be on the cards.
German CPI
The German Consumer Price Index (CPI) data will be published by the Federal Statistical Office Germany during today’s London session. The forecast is of no change from the previous estimate. So, any surprising data would trigger swing moves in the Euro.
Overall, as long as the channel resistance holds, selling rallies might be a good option.
Further reading: Who will blink first?
