Kicking off the new week by taking another look at EUR/AUD. It looks like major support wins again, but could it be set to break soon?
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Fresh Market Headlines & Economic data:
- Euro zone investor morale falls further in July, German recession looms: Sentix
- German exports, industrial production up slightly in May
- German export engine revs up in May, but second quarter still looks weak
- Turkish lira weakens 2.1% after central bank governor dismissed
- Conservative party wins Greek election, ousts left-wing PM
- Japanese bank lending falls to 2.3% y/y
- Japan May core machinery orders fall 7.8% mth/mth
- Japan posts current account surplus of 1.59tn yen in May
- BOJ’s Kuroda says moderate economic expansion to continue
Upcoming Potential Catalysts on the Forex Calendar:
- U.S. consumer credit at 8:00 pm GMT
- Japan M2 money supply at 12:30 am GMT (July 9)
- Australia NAB Business conditions & confidence at 2:30 am GMT (July 9)
- Swiss unemployment rate at 6:45 am GMT (July 9)
- Canada housing starts at 1:15 PM GMT (July 9)
- Canada building permits at 1:30 pm GMT (July 9)
- Fed Chair Powell speaks at 1:45 pm GMT (July 9)
What to Watch: EUR/AUD
It’s been a slow start to the new trading week so far, and with the calendar not looking too encouraging for a big volatility move for the next twenty four hours, we’re checking out some mainly technical setups for the first watchlist post of the week.
Today, we’re checking out EUR/AUD once again as the retest of the major support area around 1.6050 that we pointed out last week seems to have held off the bulls once again. So, with the pair consolidating, let’s take a look at a couple of setups to play the downtrend as the market continues to factor in the recent bearish euro themes, and the possibility of the NAB business survey data driving some volatility for the Aussie.
First, if you’re a conservative type bear, then a further pullback is something you want to watch out for to play the downtrend at a better price. On the one hour chart above, we can see that within the most recent swing move lower from 1.6260 – 1. 6025, the Fibonacci retracement area could draw in resistance, especially given that it lines up with a minor area of interest and minor psychological level of 1.6150. If retest and the stochastic gets back into signaling overbought conditions, then look for bearish reversal candle before triggering a short play.
For the bolder traders, we’ve highlighted the rising lows pattern, which if broken could drawn momentum sellers once again. A solid break there and below the 1.6050, with a surprise positive read from the NAB business survey data should give good odds for a move in EUR/AUD down to the major psychological level of 1.6000. If so, the pair could see strong support, but if it breaks, the next major support area may not come until 1.5700 – 1.5800, and with a daily ATR of around 80 pips, that could be a very good potential return-on-risk that’s possible to see by the end of the week.