After facing recent selling pressure, the EURAUD currency pair found itself at the centre of a bustling day in the financial markets, marked by significant economic releases. The morning kicked off with the release of the RBA meeting minutes, unveiling insights from the recent session where the decision was made to maintain Australia’s interest rates at their existing levels.
The revealed minutes highlighted the RBA’s intention to scrutinize upcoming data, carefully weighing the risk of keeping rates high for an extended period against the danger of taking insufficient action and potentially jeopardizing its strengthened stance in the ongoing battle against inflation. The RBA’s report carried a slightly hawkish tone, acknowledging progress on the inflation front and hinting at the need for this positive momentum to persist.
The spotlight then shifted to Eurozone inflation data, revealing no surprises. Year-over-year inflation followed consensus, sliding from 2.9% to 2.4%, while core inflation mirrored this trend, aligning with forecasts at 3.6%, down from the previous 4.2%.
Technical
On the 4H chart, the dynamic resistance of a descending channel is preventing the buyers from enforcing a meaningful upside. The 25-SMA (green line) backs this resistance and provides a challenging barrier to a potential retracement amid the recent selling pressure.
However, a breakout above 1.6281 could trigger an influx of buyers. Clearance of the 25-SMA at 1.6303 could then signal a shift in short-term momentum, potentially catapulting the currency pair toward 1.6321 and 1.6367, above the 50-SMA (blue line). In the longer term, the pair may face another hurdle at the 100-SMA (orange line), which is currently close to the 1.6424 resistance and could be the last line of defence against the currency pair retesting the psychological supply zone at 1.6469.
Conversely, failure to clear resistance at 1.6281 could open the pair up to additional downside in a continuation of the trend. Support at 1.6233 could be the first potential pivot point before neckline support at 1.6201 could come into play in an effort to prevent the trend from sustaining long-term.
Summary
With little surprises in today’s economic releases, the EURAUD currency pair failed to receive enough directional volume to enforce a trend reversal. Resistance at 1.6281 could be a level to watch in the upcoming sessions, as it could prevent the currency pair from retracing its recent selloff.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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