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EUR/AUD: Euro Poised For Continued Weakness Ahead Of ECB

ByCapital Trust Markets
Published 10/02/2014, 04:00 AM
Updated 07/09/2023, 06:32 AM

Technical Bias: Bearish
 
Key Takeaways
·         Euro broke an important support area against the Australian dollar, which might cause heavy downside moving ahead.
·         European central bank interest rate decision and press conference are major risk events today.
·         Dovish ECB might send the Euro lower, especially against the Aussie and Kiwi dollar.

The Euro lost a lot of ground against the Aussie and kiwi recently, and it looks like it might continue to head lower if sentiment stays bearish.

Technical Analysis
There was a critical bullish trend line on the 4 hour timeframe of the EUR/AUD pair, which was broken during Asian session. Currently, it is trading around the 100 hourly simple moving average and struggling to hold ground. If it successfully closes below the mentioned moving average, then it might encourage the euro sellers to take the pair towards the 200 SMA (4H). EUR/AUD has closed below the 23.6% Fibonacci retracement level of the last leg from the 1.3794 low to 1.4578 high. So, there is a chance of a move towards the 50% fib level, but the pair needs to clear the 200 SMA (4H) in that case. RSI has also dipped below the 50 level, which suggests that sellers are here to stay.

EUR/AUD Hourly Chart

If the EUR/AUD pair manages to bounce from the current levels, then the broken support trend line might act as a hurdle for the pair. Any further gains should be limited, as the 50 SMA (4H) might act as a barrier in the near term.

Moving ahead
We need to keep a close eye on the ECB press conference, as it can cause a lot of moves in the shared currency. One might consider selling rallies around the 1.4420 level as long as the pair stays below the 50 SMA (4H). On the downside, the next level of interest is around 1.4280. 

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