Today has been a whirlwind for the EURAUD currency pair, as economic data from both sides of the globe stirred up excitement, poised to influence the ongoing market trend. Down under in Australia, month-over-month retail sales dipped to -2.7% from the previous 1.6%, falling short of the -1% consensus.
Meanwhile, the Eurozone added its own twist to the story, with GDP data exceeding expectations at 0.1% on a year-over-year basis, defying the forecasted 0%. Despite this positive turn, quarter-on-quarter GDP remained level at 0%, holding its ground against the projected -0.1% decline. The Euro, flexing its strength against a weakening Australian dollar, now commands attention. The spotlight shifts to the horizon, with Australian inflation data looming on the calendar for tomorrow.
On the 4H chart, a breakdown occurred at the ascending channel, resulting in the currency pair falling below the 50-SMA (blue line), 25-SMA (green line) and 100-SMA (orange line). The current trend approached the 61.8% Fibonacci golden ratio at 1.6337 before engaging in a pivot that could test the resistance of the current descending channel.
If the price moves above resistance at 1.6430, a potential trend reversal is on the cards. A retest might be triggered where the 100-SMA and 25-SMA converge, and an additional leg above this resistance could confirm a sustainable uptrend. Resistance at 1.6473 and 1.6511 could then come into effect in the longer term if the trend maintains its momentum.
However, failure to sustainably break above the 1.6430 level could result in a pivot back toward the Fibonacci midpoint at 1.6401. From there, the Fibonacci golden ratio at 1.6337 could again come under the spotlight, opening the potential for a steeper downtrend toward 1.6301.
It has been a busy session for the EURAUD currency pair as it navigated multiple data releases. Ultimately, the Euro gained strength on its counterpart, testing resistance at 1.6430, which could be pivotal in determining whether a trend reversal could occur.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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