After a strong start to the month, the EUR/AUD pair has lost its upward momentum and looks set to extend a long-term downtrend.
Will the EUR/AUD see losses in the upcoming trading sessions?
Check out what’s happening on the 4-hour time frame!
EUR/AUD Forex 4 Hours Chart by TradingView
If you’ve been trading the European Central Bank’s (ECB) decision this week, you know that President Lagarde and her gang are widely expected to cut interest rates by another 25 basis points. They may be open to relaxing their policies further!
Meanwhile, Australia has just released better-than-expected labor market data, which supports the Reserve Bank of Australia’s (RBA) decision to stick with its relatively hawkish policies.
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. If you haven’t done your homework on the EUR and AUD yet, it’s time to check the economic calendar and stay up to date with daily essential news!
The EUR/AUD pair started the month strong, rising from the lows of 1.6000 to trade near the area of interest at 1.6300. But the bulls appear to have lost momentum, as the pair is finding it difficult to attract additional buy order above 1.6300.
Specifically, the EUR/AUD pair cannot break the R1 pivot point line (1.6324) near the 200 SMA on the 4-hours chart. It is worth noting that the pair does not seem to be able to break the resistance of the ascending channel that has been in place since August.
Does this mean that the EUR/AUD is ready to fall?
Watch your charts closely for bearish candles that could take EUR/AUD consistently below 1.6200, as this could send the pair heading towards the 1.6100 area near the S1 pivot point (1.6081) and middle channel support. We could also see a return to the previous large support area of 1.6000 if there is enough downside momentum.
On the other hand, EUR/AUD could attract enough demand at 1.6200 to push the pair back to the 1.6300 resistance level.
Depending on the overall risk sentiment, EUR/AUD could also see sustained buying pressure above the previous resistance level. In case of sustained trading above 1.6300 and channel resistance, beware of a possible move to the key psychological levels 1.6400 or 1.6500.
Whichever direction you end up trading, don’t forget to practice proper risk management and stay aware of top-notch market triggers when trading this. good luck!
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