EURAUD has been trending lower on its daily time frame, moving below a descending trend line connecting the latest highs of price action. Price bounced off a low of 1.3625 and looks ready for a pullback to the falling resistance level.
Applying the Fib tool on the latest swing high and low shows that the 50% level lines up with an area of interest or former support around 1.4100, which might hold as resistance. This is also close to the descending trend line, with the 61.8% Fib acting as the line in the sand around 1.4300 for this correction.
The 100 SMA is below the longer-term 200 SMA, confirming that the path of least resistance is to the downside. This is also near the 50% Fib, adding to its strength as resistance. Stochastic is moving up for now, which suggests that sellers are taking a break and allowing buyers to stay in the lead for the time being.
Economic data from Australia turned out mixed yesterday, with the trade balance printing a smaller 1.30 billion AUD surplus versus the estimated 3.82 billion AUD surplus. The previous reading was also downgraded from 3.51 billion AUD to 3.33 billion AUD to reflect weaker trade activity.
On the flip side, building approvals came in stronger than expected with a 1.8% gain instead of the estimated 0.1% downtick. Prior to this, Australia reported a stronger than expected GDP growth of 1.1% versus the projected 0.7% expansion while China’s manufacturing PMI readings beat expectations, signaling stronger demand for Australia’s raw materials.
For now, the euro is recovering as French election jitters and Frexit concerns are abating. Le Pen seems to be falling behind on the polls so investors seem less worried about instability in the region. However, news reports revealed that Greece is seeking financial assistance from the World Bank so it may be running out of options and still at risk of default.
By Kate Curtis from Trader’s Way